Unit 3

Part II The Collective Bargaining Process

Chapter 4 Establishing a Bargaining Unit and the Organizing Campaign

United Parcel Service (UPS) voluntarily recognized new Teamster members after it purchased Overnite Transportation. Voluntary recognition by an employer, like UPS in this situation, is a seldom-used alternative to a secret-ballot election as a means for a union to obtain the right to represent employees.

Source: © Jim West / Alamy.

You can’t do it unless you organize!

Samuel Gompers (Founder and First President of the American Federation of Labor)

Chapter Outline

1. 4.1. Bargaining Unit Determination

2. 4.2. Union Structure

3. 4.3. Bargaining Unit Determination in the Public Sector

4. 4.4. Public Sector Unions

5. 4.5. The Organizing Drive

6. 4.6. Union Organizing Strategies

7. 4.7. Union Avoidance Strategies by Management

8. 4.8. Representation Election Procedures

Labor News UPS Freight Workers Peacefully Join Teamsters

UPS has had a generally positive relationship with the Teamsters Union. Thus, when UPS purchased Overnite Transportation (which became UPS Freight), management decided not to fight any attempt by the newly acquired workers to join the Teamsters Union, which already represented UPS employees. Instead, management chose to remain “neutral” and to recognize any Teamsters local union that collected signed authorization cards from a majority of its workers and not to require a secret-ballot election. The result was majorities of UPS Freight workers signed cards and were recognized in Milwaukee, Minneapolis, Southern California, Oakland, Seattle, New England, Memphis, Detroit, and Louisville. By 2010 the Teamsters represented over 12,400 UPS Freight workers in 42 states. Ira Rosenfeld, UPS executive, explained why management chose to recognize the new workers voluntarily: “UPS Freight and UPS have always respected the wishes of the employees and will continue to do so.”

Source: Adapted from Bill Wolfe, “UPS Freight Workers Sign Up for Teamsters,” Louisville Courier-Journal (January 26, 2008), p. A1.

The collective bargaining process is at the heart of the employer–employee relationship. That process, however, is not a simple one. The 1935 National Labor Relations Act, as subsequently amended, defines the process and limits the parties to it. A group of employees cannot simply present their requests to the employer. Procedures must be followed to determine if those particular employees are protected by the act. A union purporting to represent the employees must prove that it does indeed represent them. And any particular group of employees who feel they have similar interests and desires and therefore should negotiate together may not satisfy the requirements of the act as an “appropriate” unit of employees for collective bargaining purposes. This chapter explores the process by which a group of employees can organize for purposes of collective bargaining and be recognized by the NLRB as a bargaining unit. The organizational campaign strategies of both the union (in support) and management (in opposition) and representational election process are also discussed.

Bargaining Unit Determination

The NLRB, in carrying out its lawful responsibilities, decides representation cases. That is,  Section 7  of the Labor-Management Relations Act authorizes the board to decide on a case-by-case basis the  appropriate bargaining unit  of employees for collective bargaining purposes. The board exercises this power to guarantee employees the fullest freedom under the act—mainly, employees’ right of self-organization. The NLRB does not have rigid or constrictive regulations for dealing with recognition cases. It has wide discretion in its decisions, which courts will uphold unless they find that the board acted arbitrarily. 1  Both the board and the courts recognize that more than one unit sometimes may be appropriate for collective bargaining. The board is not required to choose the most appropriate unit, only an appropriate unit, as demonstrated in Case 4-1 which involves the service technicians and lube workers at a Ford truck dealership. Although there are no hard-and-fast rules in the act to determine appropriateness, there are certain limitations on the types of units and on workers to be included and excluded from units. The NLRB generally follows certain fundamental and logical policies in determining an appropriate bargaining unit.

Appropriate Bargaining Unit

The group of employees determined by the NLRB to be an appropriate unit for collective bargaining purposes. After a bargaining unit is identified, the employees of that unit have the right to select their bargaining representative, usually a labor union.

CASE4-1 Appropriate Bargaining Unit: Ford Truck Dealership

The company is a truck dealership that sells, modifies, and services light-duty and heavy-duty trucks. The company operates two facilities. The Main Facility is the primary location for sales and service of trucks. The second, known as the Annex, is across the street and operates under a different name. The Annex specializes in servicing, equipping, and modifying trucks. The central issue in dispute is whether the union designated an appropriate collective bargaining unit under the National Labor Relations Act.

At the Main Facility, the service department consists of several service advisers who deal with customers seeking truck service, approximately 14 service technicians who diagnose and repair trucks, and two lube workers who perform lubes, oil and filter changes, and the like. The service technicians work either day or evening shifts. They are responsible primarily for the actual servicing and repairing of customer vehicles. Service technicians are paid an hourly wage, receive commissions based on their efficiency, and can receive commissions for additional work authorized by a customer on a technician’s recommendation. Service technicians are certified and are required to provide their own tools, wear blue uniforms with a company logo, and attend regularly scheduled meetings with management. The lube workers also work either day or evening shifts. They work alongside the service technicians and are responsible primarily for oil and filter changes and lubes. The lube workers are not certified and are paid hourly. One lube worker owns his tools; the other does not. The lube workers report to the same supervisor as the service technicians.

At the Annex are several installer/fabricators, a parts employee, and an estimator. The installer/fabricators are technically part of the company’s service department. The Annex employees are responsible primarily for installing custom beds and other features on trucks sold by the company and those brought in for service or other work. Sometimes work is performed on the same truck at both locations, as when modifications are made to trucks bought at the main location, and some of the work is performed at the Annex, such as air conditioner and hitch installation. Installer/fabricators employed at the Annex must be able to weld and are administered a welding test prior to employment. Like the service technicians, the installer/fabricators are required to provide their own tools. There is only one shift at the Annex, however, and Annex workers have a different supervisor than the service department employees. Annex employees wear a different uniform and are paid an hourly wage without any commission or bonuses.

The company employs one human resources manager for both facilities. The company’s parts and service director also interviews all applicants for either facility. Employees at both facilities are on the same payroll and have the same vacation and benefit policies as well as use the same break room, though there is an additional break room in the Annex. Employees are rarely transferred from one facility to the other. All the company employees attend occasional safety meetings and company functions.

The union filed an election petition to represent a unit of employees at the Main Facility consisting of all full-time and regular part-time service technicians and lubricators. The NLRB certified the 16 employees at the Main Facility as an appropriate unit, and an election was held. The union won by a vote of nine to seven and was certified. The company, however, refused to bargain, contending that the group of employees designated as the bargaining unit was not the appropriate unit for collective bargaining.

The company claimed that the board erred in its unit determination because there were other appropriate units. For example, the company believed that a pure “craft” unit consisting of the service technicians was a more appropriate unit because the lube workers have limited responsibilities and do not receive technician training or that a broader unit that included all the service department personnel at both locations would be a more appropriate unit because the employees performed functions related to the repair of trucks.

Decision

The Court noted that the National Labor Relations Act delegates to the NLRB the power to determine what an “appropriate” employee unit is for collective bargaining purposes. The Court will uphold an NLRB’s unit determination as long as the identified unit is appropriate and the decision is supported by evidence. The company’s position was that the unit certified by the NLRB was not appropriate because there were other potential units that could also be appropriate. But the existence of other “appropriate” units will not in and of itself invalidate a finding of the NLRB that the unit requesting recognition is an appropriate unit. In this case, placing the lube workers in the same unit as the service technicians made sense because of all the workers at the Main Facility, these were two groups of workers who actually performed mechanical work. And although there might have been similarities between the workers in the Main Facility and in the Annex, there were also differences. The Annex workers performed different functions and were required to have different skills. They worked different shifts and were compensated differently. The Court upheld the NLRB decision that the service technicians and the lube workers were an appropriate unit.

Source: Adapted from Country Ford Trucks, Inc. v. NLRB and International Assoc. of Machinists and Aerospace Workers, AFL-CIO, Local 1528, 165 LRRM 2649 (2000).

Most contracts contain an article that specifies the recognition of the union as the representatives of the bargaining unit, such as this example:

Article I

Recognition

· Section 7  The Company recognizes the Union, during the term of this Agreement, as the sole and exclusive representative of the employees in the bargaining unit defined as “The Electrical Workers Unit” by the National Labor Relations Board in its Decision and Direction of Election dated August 12, 1944, for the purpose of collective bargaining with respect to rates pay, wages, hours of employment and other conditions of employment. 2

Bargaining Unit

The bargaining unit is defined as the particular group of employees represented by the union in collective bargaining. The union has exclusive bargaining rights for all employees within the unit, whether they join the union or not; and it has no rights for those employees outside of the bargaining unit. The determination of exactly which employees are within the bargaining unit may have a great effect on the outcome of the organizing campaign. The union seeks a unit in which it feels it can win a majority of the vote in a representation election. When the employer and union cannot agree on the unit, the NLRB, under  Section 7  of the National Labor Relations Act, decides on “the unit appropriate for the purposes of collective bargaining.” 3

Appropriate Unit

The basic underlying principle for the NLRB’s determination of an appropriate unit is that only

employees having a substantial mutuality of interest in wages, hours, and working conditions can be appropriately grouped in that unit. The logic is that the greater the similarities of working conditions, the greater the likelihood the unit’s members can agree on priorities and thus make the collective bargaining process successful. 4

The criteria that are most often used in deciding what constitutes a rational unit include community of interest, history of bargaining, desire of employees, prior unionization, relationship of the unit to the organizational structure, and public interest.

Community of Interest

The  community-of-interest doctrine  attempts to quantify, by means of descriptive criteria, when workers should feel that their individual interests are so similar that collective bargaining will be fruitful. The board has at various times enumerated these criteria: similarity of job functions and earnings, in benefits received or hours worked, and/or in job training or skills required; a high degree of contact and interchange among the employees; and/or geographic proximity and common supervision. 5  All these factors can indicate a common interest or interests that, coupled with the other listed criteria, establish an appropriate unit.

Community of interest

Criteria used by the NLRB to evaluate a group of employees and determine whether they constitute an appropriate bargaining unit, including; similarity of jobs, and wages & benefits; degree of contact and proximity; and common supervision.

The NLRB’s decisions in this area are subject to change, however. For example, in a 2000 decision, the NRLB ruled that a group of temporary employees at M. S. Sturgis, Inc. showed “a sufficient community of interest” with permanent employees to be added to the bargaining unit. 6  The “temporary employees” were subject to the same supervision, worked the same hours, and performed the same work side by side with the permanent workers who were part of a bargaining unit. This ruling reversed a 1990 NLRB ruling and was widely touted as giving about 5.7 million temporary employees collective bargaining rights for the first time. 7  In 2004, the NLRB reversed its decision in M. S. Sturgis in Oakwood Care Center and ruled that full-time employees of one employer could not be in the same bargaining unit as employees who were jointly employed (i.e., as temporary employees with a joint but separate employer). Oakwood, a long-term residential care facility, had its own employees, and it used a temporary service for additional employees. All the employees were supervised and disciplined by Oakwood supervisors, and Oakwood and the temporary service jointly determined the pay and benefits of the temporary employees. The NLRB acknowledged that under the Sturgis case, the temporary employees would have been a part of the bargaining unit. In overruling Sturgis, the NLRB, in a 3–2 opinion, stated that grouping employees of different employers into the same bargaining unit violates the act’s purpose of protecting employee rights by subjecting the employees to fragmented bargaining and inherently conflicting interests. 8

History of Bargaining

If a bargaining unit and a particular employer have a history of bargaining, the board will recognize the appropriateness of the unit, in the absence of compelling reasons to the contrary, to ensure the employees’ right of self-organization and most importantly to provide a climate of stable labor relations. History of bargaining usually becomes a question when the board receives a request for decertification to allow for smaller or different bargaining units or when a new class of employer has come under the board’s jurisdiction, such as when the National Labor Relations Act was extended to the health care industry. Although the board favorably considers prior bargaining relationships, such histories are not absolute. The board has disregarded history of bargaining in several cases when that history contravened the board’s policy of mixing clerical and production and maintenance personnel, when it was based on oral contracts, and when it reflected racial or sexual discrimination. 9

Employee Wishes

The  Globe doctrine  established the NLRB policy to give weight to employee wishes when determining an appropriate bargaining unit. 10  Although the board cannot delegate the selection of a bargaining unit to employees, it may use the election process as a way to consult employees. In the Globe case, the board provided for special balloting to determine the representation wishes of the employees. The situation involved both a small craft unit and a large industry unit, and both could be appropriate. By permitting the employees in the smaller unit to indicate their preference, the board was able to decide whether to leave the craft group in the smaller bargaining unit or to combine it with the larger group. 11  Such consultation is especially helpful if two or more bargaining units are considered about equally appropriate by the board’s otherwise objective standards.

Globe doctrine

The policy set by the NLRB to help it determine the representation wishes of employees when establishing an appropriate bargaining unit. The board may use the secret ballot election process as a means of giving weight to the desires of a group of employees, such as a smaller craft group within a larger industrial group.

Employee Unionization

The NLRB considers the extent of unionization by a bargaining unit as one factor in unit determination but not as a controlling factor. The question is still one of appropriateness and not of whether the wishes of a union can be honored. If the bargaining unit is otherwise appropriate, prior unionization can be considered to indicate employee wishes.

The Unit and Employer Organizational Structure

As discussed earlier, the considerations used to determine appropriateness are not legally binding formulas but an exercise in rational examination of the facts of an individual case. The NLRB recognized this distinction from its earliest decision. In Bendix Products Corporation, the board stated, “The designation of a unit appropriate for the purposes of collective bargaining must be confined to evidence and circumstances peculiar to the individual case.” 12  Under such a philosophy, an employer may, because of its relationship to branch offices or particular reporting policies, make an otherwise inappropriate unit appropriate for its employees. Thus in some cases the organizational structure and geographic locations may affect the decision on the bargaining unit. The board must examine, in some cases, the internal operations of a company to ascertain those peculiarities.

Public Interest

One consideration added by the courts for review by the board is the public interest. Without much guidance provided by the courts, the board is to ascertain when its decision will serve the public interest. In making this determination, the NLRB must not be affected by the desires of the parties involved. 13

Accretion

When new employees or positions are added by an employer,  accretion  allows the NLRB to consider adding the new groups of employees directly to existing units if their work satisfies the same criteria as the original unit, that is, community of interests, bargaining history, interchange of employees, geographic proximity, common supervision, and union wishes. However, such a determination is not automatic. If the new class of employees retains a separate identity, perhaps by virtue of its newness, it can be determined an additional appropriate unit. Accretion usually occurs when an employer expands operations, builds a new facility, or merges with another employer. It is often to the advantage of the union to have an accretion since it adds more employees to the bargaining unit. 14  Accretion offers the board a conflicting choice. Adding new employees to an established union preserves the stability so important under the act, but squeezing in new employees, under perhaps narrow similarities, constricts the employees’ freedom of choice.

Accretion

The practice of allowing the addition of new employees and jobs to existing bargaining units provided their work satisfies the same criteria of the original unit.

For example, in 2009 the NLRB ruled that baristas working at a Starbucks franchise in a Hilton hotel restaurant should be a separate bargaining unit, and not accreted to the existing restaurant employees unit. The board found there was not sufficient community of interest between the Starbucks and hotel employees because there was no common supervision, no regular contact, and a lack of integration of work with the hotel restaurant workers. Starbucks exercised significant control over its own operation, including service rules, food supplies, and training of employees. In addition to specialized coffee drinks, Starbucks employees sold merchandise while other hotel employees did not. The hotel employees’ handbook, however, did cover the baristas as well as other employees in the bargaining unit and hotel management hired all the employees. UNITE HERE, the union that represents the other hotel employees, had requested that the baristas be accreted; the hotel, however, opposed the accretion. 15

Stipulated Units

The board’s authority to determine an appropriate unit is not without limitations. A company and a union may stipulate to the board what they consider an appropriate unit. The courts have said that the board may not alter the bargaining unit in such cases. However, a stipulated unit may not violate principles in the National Labor Relations Act or established board policy, for example, by including supervisors. 16

Supervisors

Supervisors, by the nature of their work, generally are considered management under the NLRA and thus excluded from any bargaining unit—or from the collective bargaining

The NLRB in a 2009 case decided that Starbucks employees working inside the Hilton Milwaukee City Center should not be accreted to an existing restaurant bargaining unit, but instead should have their own bargaining unit.

Source: Getty Images.

rights granted under the act. As the workplace has become more complex and jobs more varied, the exact definition of a “supervisor” under the NLRA has become an issue debated in the U.S. Congress and by labor experts. The National Labor Relations Act defines a supervisor as “someone using independent judgment to assign and direct the work of other employees in the interest of the employer.”

In 2007, the Re-employment of Skilled and Professional Employees and Construction Tradeworkers (RESPECT) Act was filed in Congress to amend the NLRB definition of supervisors. The bill would delete the words “assign” and “responsibility to direct” from the definition and would require that employees must be in a supervisory role for at least 50 percent of their work time to be classified as a supervisor under the NLRA. Supporters of the RESPECT Act believe that employees, including team leaders, contraction foremen, and nurses, are not primarily management and should have collective bargaining rights. Opponents believe the bill would make a significant change from the past 60 years. 17

The lines drawn by court rulings and board interpretations are never exact. In National Labor Relations Board v. Yeshiva University, it was determined that the faculty members were managerial employees because of their input into the academic product of the university. As managerial instead of professional employees, they did not come under the protection of the National Labor Relations Act and could therefore not be recognized. Such a determination has a negative effect on unionization in the academic sector. 18  In 2004, the NLRB ruled that graduate teaching assistants are students and thus have no right to organize. This ruling overturned a 2000 NLRB decision that required New York University to recognize a graduate teaching assistants’ union. The 2000 NLRB ruling sparked a wave of union organizing efforts on private university campuses across the Northeast, including Brown, Columbia, Temple, Harvard, Cornell, Tufts, and the University of Pennsylvania: 24 campuses altogether with over 40,000 teaching and researching assistants represented by unions. Then, in 2004, a new NLRB “loaded with Bush appointees reversed the 2000 ruling.” 19

Types of Units

Certain types of units have evolved within the established principles of appropriateness. The act itself lists employer units, craft units, plant units, or their subdivisions.

Craft Units

Workers whose jobs primarily require a recognized skill, such as electricians, machinists, and plumbers may compose a  craft unit  . Recognition questions for craft units usually come before the board when a group of craft employees wants to break away from an existing industrial union which included many different skills job functions—this action is called craft severance. Congress has established the policy that the board cannot determine a craft unit inappropriate on the grounds that a different unit has been established by prior board determination, unless the majority of the employees in the craft unit vote against separate representation. Despite this legislative policy, the NLRB has severely limited craft severance elections through a number of decisions. Under the National Tube doctrine, 20  the board identified certain industries whose operations were so integrated that craft workers could not be taken from the unit without affecting the stability of labor relations. And in the Mallinckrodt Chemical Works decision, the board outlined the criteria it would use to allow craft severance; the application of these standards has greatly reduced incidents of craft severance. 21

Craft unit

A bargaining unit composed exclusively of workers with a specific and recognized skill, such as electricians or plumbers.

The NLRB requires that the craft group be distinct from others in the unit by virtue of the skilled, nonrepetitive nature of its work. The board examines the extent to which the group has retained its identity or, as the alternative, actually participated in the affairs of the larger unit. The impact of separating the craft unit from the whole is also a factor in the board’s determination. Consideration of the particular bargaining history of the larger unit, as well as the history of collective bargaining in the industry as a whole, must be part of the board’s deliberations. In some instances, the NLRB decision is influenced by the degree to which the craft work is integrated with the unskilled work and therefore essential to the production process. Finally, the board may examine the qualifications of the union seeking to represent the craft union for its experience as an agent for similar groups. 22

The International Brotherhood of Electrical Workers (IBEW) is known as a craft union because most of the members have a recognized skill—they work with electrical components and equipment as line technician, repairers, machine operators, meter installers, boiler operators, cable splicers, welders, and the like.

Source: AP Images.

Departmental Units

Similar to a craft unit, a  departmental unit  is composed of all the members of one department in a larger organization. The board uses standards similar to those used for craft severance in determining one department to be an appropriate unit separate from the entire plant or company. An examination of the difference in skills and in training, the degree of common supervision, the degree of interchange with employees outside the department, and different job performance ratings have been used to allow a departmental unit to exist. 23

Departmental unit

Similar to a craft unit, a departmental unit is composed of all the members of one department in a larger organization.

One Employer, Multiple Locations

Many employers have plants, facilities, or stores at more than one location. And the NLRB must determine if a single location can be an appropriate unit or whether all locations should constitute a single unit. It is well established that a petitioned-for single facility unit is presumed to be an appropriate bargaining unit. 24  That presumption, however, is rebuttable on a showing that the single facility has so effectively merged into a more comprehensive unit, or is so functionally integrated, that it has lost its separate identity. To determine whether the single-facility presumption has been rebutted, the board looks at such factors as the centralized control over daily operations and labor relations; extent of autonomy of the local management to handle the facility’s day-to-day ordinary operations and to supervise the employees’ day-to-day work; similarity of employee skills, functions, and working conditions; extent of employee interchange; geographic proximity; and bargaining history, if any. 25  The party opposing the single-facility unit has the burden of rebutting its appropriateness. However, the board does not require overwhelming evidence of such integration. In one, the board determined that the employer had successfully rebutted the presumption of a single-facility unit when the union sought to represent employees at one of the two facilities of the employer, and the board determined that the two facilities operated as one even though they were 100 miles apart. 26  The board reached the opposite conclusion in a case in which the facilities, in this case Kroger stores, were merely 8 miles apart, but there was minimal interchanges between them. 27

Multiemployer Units

Although the Wagner Act favors localizing a unit within one employer, collective bargaining can be conducted between a group of related employers and representatives of their employees. 28  Factors to be considered in such a designation are whether there is an express or implied approval of all parties to enter into such bargaining relationship or if the history of the bargaining in the industry implies intent to consent to multiemployer units. The employer can withdraw from a multiemployer collective bargaining relationship before the date for modification or negotiation of a new contract. After bargaining has begun, an employer may withdraw only with the union’s consent or on showing unusual circumstances. The union consent ensures the stability necessary under the National Labor Relations Act, and the board has found unusual circumstances when there is a genuine bargaining impasse. 29

Residual Units

Workers do not always fit into neat packages, and the board has sometimes given recognition to odd collections of employees because of their common working situations or the proximity of their working sites. The NLRB policy is that employees are entitled to separate representation if they are left unrepresented after the bulk of employees are organized. Employees who do not fit anywhere else—such as sales and service personnel, porters, janitors, and maids—are combined into  residual units  .

Residual unit

Employees left unrepresented after the bulk of the employees are organized, such as janitors and sales people, may be entitled to separate representation by a residual unit.

Remaining Units

Employee groups that are separate from primary production and maintenance units can be classified as  remaining units . Because of exclusions contained in the act itself, professional employees and guards often have professional and guard units. Technical units contain employees with a high degree of skill and training who exercise independent judgment but fall short of professional status. The factors to be considered in determining a technical unit are the desires of the party, the bargaining history, the existence of a unit seeking self-representation, the separate supervision of the technical employees, the location of the workplace, similarity of work hours, and employee benefit packages. It often becomes a question

Remaining unit

An employee group separate from the primary production and maintenance units in their job duties, such as pro-fessional, technical, guard, and clerical units.

of who should be included on the basis of the level of skill and training, employee contact and interchange, and similarity of working conditions. Departmental units are treated the same as craft units in severance cases. Office clerical units are commonly separated from production and maintenance units in a large plant because the board recognizes the common interest of office clerical employees, regardless of previous bargaining history.

Construction Industry Units

Due to the unusual nature of the U.S. construction industry—seasonal, temporary, or project-based—it is given unique treatment in the act:

Sec. 8. [§158.] (f) [Agreements covering employees in the building and construction industry] It shall not be an unfair labor practice … for an employer … to make an agreement … with a labor organization … because the majority status has not been established under  Section 7  of this Act prior to the making of such an agreement, or (2) such an agreement requires as a condition of employment membership in such a labor organization after the seventh day following the beginning of such employment … or (3) such agreement requires the employer to notify such labor organization of opportunities for employment with such employer …

Thus in the construction industry an employer may begin to bargain with a union before any employees are hired for a new project. The union, unlike unions in other industries, is not required to show it represents a majority of the employees in an appropriate bargaining unit before it bargains with the employer. These negotiated agreements are called “pre-hire” or Project Labor Agreements (PLAs). 30  However, the NLRB has held that a PLA is unenforceable if it requires the use of only union labor on a project or if it gives a union leverage in securing necessary permits resulting in a “labor monopoly” on the project. 31

Health Care Institution Units

The 1974 Health Care Amendments extended coverage of the act to employees of nonprofit hospitals. In hearings concerning the amendments, Congress directed the NLRB to give “due consideration … to preventing proliferation of bargaining units in the health care industry.” However, this direction was not specified in the language of the act itself. The board applied the usual standards for unit determination for a number of years but eventually passed an administrative rule approving eight basic appropriate health care units for the health care industry in 1987:

1. Physicians

2. Registered nurses (rns)

3. All other professional employees, including licensed practical nurses

4. Technical employees

5. Business office clerical employees

6. Skilled maintenance employees

7. Guards

8. All other nonprofessional employees

The American Hospital Association brought action to enjoin the board from enforcing the newly promulgated rule. The Supreme Court upheld the board’s ruling. 32  Unions blamed the delays caused through the litigation brought by hospitals challenging the bargaining units for stymieing union efforts to organize the health care industry. 33

Management objection to nurses’ bargaining units continued. In NLRB v. Health Care & Retirement Corporation, 34  the Supreme Court reversed an NLRB ruling regarding nurses’ units and severely reduced opportunities for growth of unions in the health care industry. In that case the health care corporation had challenged the certification of a nurses’ unit on the grounds that the nurses acted as “supervisors” and were therefore exempt from the act. The Court agreed and pointed out that the NLRA defines a supervisor as someone using independent judgment to assign and direct the work of other employees in the interest of the employer. Under that definition, most nurses were supervisors and, therefore, exempt from the act. In response, the NLRB tried to carve out an exception stating that nurses were not supervisors exercising “independent judgment” if their judgment was no more than using their professional or technical training or experience to direct less-skilled employees to deliver services in accordance with employer-specified standards. The Court rejected the NLRB exception in NLRB v. Kentucky River Community Care, Inc., 35  holding that just because a nurse’s exercise of supervision was limited by professional standards did not mean the nurse was not a supervisor. In 2006, the NLRB again tried to clarify the issue of supervising nurses’ collective bargaining eligibility. In the first case, Oakwood Health Care Inc., the NLRB ruled that nurses in acute care facilities who use “independent judgment” in a “non-routine” manner to direct the work of other employees should be considered supervisors. The board found that “permanent charge nurses” (as opposed to temporary charge nurses) exercised independent judgment when “assigning” other nursing personnel to care for specific patients and that such supervisory activity was a substantial part of their work time. 36  The NLRB decision in Oakwood Health Care was controversial and led to members of Congress introducing bills that sought to overturn the decision. In the second case involving nurses at a nursing home, the board found that the charge nurses did not exercise sufficient supervisory authority to exclude them from the act; in fact, the charge nurses were not evaluated on how they did or did not direct other employees. 37

Union Structure

The structure of labor unions reflects the reasons they were formed and the influences of the times in which they grew. Unions seek to secure a better living standard for their members through higher wages and fringe benefits and to enhance job security through tenure, layoff provisions, and seniority rights. In addition, labor organizations have broadened their interests to seek legislative protections for workers such as occupational health and safety laws, workers’ compensation, and unemployment insurance. To meet the unions’ objectives, a two-tiered labor organizational structure has evolved. On the local level, job-oriented units form the basis for bargaining with employers. On the national level, a network or federation of unions pursues broader goals.

Types of Unions

Craft Unions

Craft unions are made up of workers who have been organized in accordance with their craft or skill. “One craft, one union” is their slogan. For example, in the building construction industry, skilled workers include electricians, carpenters, bricklayers, and ironworkers; in the printing industry, printers, typesetters, and engravers; in the service industry, barbers, cooks, and telephone workers; and in the manufacturing industry, millwrights, machinists, and tool-and-die makers. The craft union, as an organization of skilled workers, is able to approach an employer on a much different footing than the industrial union. A craft union local typically seeks to organize all practitioners of its trade employed by a certain employer or within a specific geographic area. By doing so successfully, the craft union creates a union shop. Employers who need the services of a skilled laborer must employ a union member. Craft unions also seek to restrict the supply of skilled laborers so they can demand higher wages. Stringent apprenticeship programs consisting of several years of classroom instruction and on-the-job training limit craft union membership. State or local licensing boards composed of members of the trade union can often restrict the number of licenses issued.

Craft Union

A labor union whose members primarily perform jobs of one particular skill.

Labor agreements entered into by craft unions usually cover a geographic region rather than one employer. Union members may work for more than one employer within a year and still be covered by that same agreement. This practice is common when the building trade unions have negotiated a labor agreement with all the major construction companies in the area. Electricians, plumbers, drywall installers, and other trades can go from job to job under the same agreement.

Since carpenters have a particular skill they are often in a craft union.

Source: Levent Konuk/ShutterStock.

Industrial Unions

Industrial unions are generally composed of unskilled and semiskilled workers or all the nonmanagement personnel in a plant or facility and due to their numbers often have a wider and stronger base than craft unions. The slogan “One shop, one union” typifies the  industrial union  seeking to organize workers at one workplace with the same employer, regardless of their skills or jobs. The industrial union seeks to increase membership to ensure its influence.

Industrial union

A labor union whose membership is composed primarily of semiskilled or unskilled workers, such as automobile workers and steelworkers, who are organized on the basis of the product they produce. Usually all production and maintenance (not management) workers within an organization belong to the same industrial union.

Typical industrial unions include organizations of autoworkers, rubber workers, textile workers, commercial workers, steelworkers, miners, and truck drivers. Increasingly, government employees such as firefighters, police, and hospital workers are organizing industrial-type unions. However, a study of industrial unions’ organizing efforts in recent years revealed that they have transitioned into more “general” unions as they have sought to expand their membership outside their traditional industry, which in most cases has seen a declining number of employers and employees. For example, the United Automobile Workers (UAW) Union conducted in one year 47 campaigns—nearly half of all its organizing campaigns and certification elections—in nonautomobile industries including transportation, wholesale retail sales, and services. 38

The local industrial union most often is affiliated with a national or international union. Some national unions negotiate master agreements, which are regional or national labor agreements covering wages, transfers, pensions, layoffs, and other benefits. The local agreement must be negotiated separately to cover matters of specific concern to the local union and the plant. An example of such an agreement is the labor agreement between the United Auto Workers and Ford Motor Company.

Members of an industrial union often join the union after being hired simply because of a provision in the collective bargaining agreement. Members regard their union as their voice with the employer, and when employment ends, their membership usually ends as well.

Levels of Unions

The four levels of unions are local unions, national (or international) unions, intermediate unions, and the federation of unions.

Local Unions

Unionized workers are members of a local union, which is the organizational component of the labor union. It handles the day-to-day operations of the collective bargaining

The United Auto Workers (UAW) is known as an industrial union because it represents almost all the employees in one workplace: “one shop, one union.”

Source: MCT via Getty Images.

agreement, disposes of most grievances, manages strikes, and disciplines members. A local union may fill a social role in the lives of its members, sponsoring dances, festivals, and other functions. It may be the focal point of the political organization and activity of its members.

A local union usually meets once a month to conduct business. At such meetings, annual elections are held, union issues are discussed, and activities are organized. Although this level is the most important to its members, attendance at the union meetings varies and is highest at times of crisis. Unlike paid  business agents  for craft unions, elected officials of local industrial unions are compensated by being given time off the job when conducting union business. Local unions usually adopt bylaws that specify their jurisdiction, meetings, and election process, as well as the duties and salaries of officers (see  Figure 4-1 ).

Business agent

The full-time administrator of a local union paid to handle the negotiation and administration of the union contract as well as the daily operation of the union hiring hall.

Local Officers

Officers of local unions are usually elected positions for fixed terms. The positions often include president, vice-president, secretary/treasurer, sergeant-at-arms, business manager (or agent), and steward (See  Figure 4-1 ). The local officers often serve on the negotiating committee with other members elected by the membership or chosen by the officers. This role is their most important, and when two slates of candidates run for officer positions, how well they perform at the bargaining table may determine which slate is selected. The same officers may serve for several terms—unless the members become dissatisfied with the terms of a new contract, and then look to elect new officers whom they believe “can deliver the bacon.” The second major role of officers is the handling of daily union–management business, in particular resolving grievances. These functions may be handled by the union business manager and shop stewards. The business manager is usually a full-time employee of the union who handles daily administration of the contract. Local unions usually have several shop stewards.  Stewards  have a unique and critical role in the union. They are either appointed or elected by the membership and serve in a unique role—as

Steward

An on-the-job union representative who carries out the responsibilities of the union in the plant at the departmental level.

Figure 4-1

Bylaws of Local Union

Source: Kenzie Baker, IBEW Local Union 1347, permission granted by Stephen Feldouse Business Manager, (December 2005).

an employee of the employer who then represents a union member when the employees have a grievance against the employer! They are the “eyes and ears” of the officers and alert them to issues of concern. To the members of the union the steward is the personification of the union. Many members’ only direct weekly contact with the union is the steward, and thus stewards often hold great influence with members. Thus stewards become a buffer between management and the union, and their ability to facilitate grievances is critical to their success. Unions often, therefore, provide training programs to their stewards in areas such as communication skills, handling difficult people, searching for the true interests that underlie an issue, and techniques to resolve grievances at their lowest level- which is beneficial to both the union and management. For example, in Ohio the United Food and Commercial Workers Union (UFCW) Local 1099 provides steward certificate training during quarterly business meetings. This difficult dual commitment of stewards—to both management and the union members is likely the cause of high turnover in steward positions. Successful stewards are highly regarded by both sides and often are elected to officer positions in the union. Some union leaders believe the role of steward and thus his/her ability to successfully meet the dual commitment is the most important factor, perhaps next to the terms of a new contract, in membership satisfaction with their union, and therefore the officers.

National (or International) Unions

Typically, but not always, the local union is affiliated with a national or international union. Craft and industrial unions organize on a national basis and designate local unions by region. The national union serves as the local’s parent, having created it. But a local union is considered a separate and distinct voluntary association owing its existence to the will of its members. The union’s constitution, bylaws, and charter determine the relationship between a national union and its subordinate local unions. The charter is a contract between the national and local organization and its members. The constitution and bylaws authorize the national union not only to function but also to protect individual rights.

The national union provides services to the locals, and the fundamental relationship is based on the services rendered. Services include organizing the nonunion workers within the jurisdiction of the local union. In appropriate circumstances, the national union negotiates master agreements with nationwide employers and then assists the local union in negotiating a local agreement. Even if no national contract is entered into, the national union assists the local unions in their contract negotiations through its research and educational services and may provide an expert negotiator. A national union helps with grievance and arbitration administration and provides support in strike activities. National unions play an important role organizing new members, as well as a representative role on behalf of their locals in national and statewide political interests. Local unions support the national unions with dues and send members to participate in national conventions.

Intermediate Organizational Unions

Intermediate organizational unions consisting of regional or district officers, trade councils, conference boards, and joint councils lie between national and local unions. For industrial unions, the intermediate office serves to bring the national office closer to the local unions to provide better services. For craft unions, joint councils often bring the various crafts together to give them better negotiating power with local construction employers, to coordinate their activities, and to assist in resolving jurisdictional disputes between craft unions.

Federation of Unions

From 1955, when the American Federation of Labor (AFL) and Congress of Industrial Unions (CIO) merged to create the AFL-CIO, until 2005, the AFL-CIO was the only  federation of unions  in the United States. In 2005, however, seven national unions split from the AFL-CIO to create Change to Win.

Federation of unions

The uniting of many national unions to increase union power and recognition. The federation serves as a national spokesperson for its members although it is not a union itself. Two federations in the United States are the AFL-CIO and the Change to Win Coalition.

The AFL-CIO today is composed of 56 national and international unions; has approximately 39,000 local unions; and 10.5 million members including plumbers, machinists, teachers, musicians, engineers, bottlers, firefighters, editors, and farmworkers.  Figure 4-2  illustrates the AFL-CIO structure. Federations were formed to increase union power. Although the AFL-CIO is itself not a union, it represents U.S. labor in world affairs and coordinates union activities such as lobbying, voter registration, and political education. For example, the AFL-CIO worked with local unions to defeat two Los Angeles campaigns to break up the city. The secession issues appeared on the ballot in Hollywood and the San Fernando Valley in 2002. Supporters hoped to create new smaller cities and cut the costs and taxes for municipal services such as police, fire, sanitation, public works, and housing. The city of Los Angeles at the time had 35,500 workers, most of who belonged to labor unions. Miguel Contreras, head of the Los Angeles County Federation of Labor, AFL-CIO, noted that Los Angeles had “progressive” labor laws, which might not be passed in the new cities. The new cities would be required to honor existing union contracts for one year only. With over 810,000 California members, the federation distributed leaflets and manned telephone banks against the succession ballots. 39

Figure 4-2

AFL-CIO Organization Chart

Source: Available at www.aflcio.org (2008). Accessed May 2, 2009.

Change to Win

In 2005, seven national unions split from the AFL-CIO to form the  Change to Win  Coalition, a new union federation of national unions dedicated to growing their membership through strategic organizational campaign and improving the living standards of workers. The three national unions that led the split were the International Brotherhood of Teamsters, the Service Employees International Union, and the United Food and Commercial Workers. The new federation started with six million members and elected Anna Burger as the first woman in history to lead a labor federation in the United States (see  Profile 4-1 ). In 2010 Change to Win represented over 5.5 million members, and was known for aggressive organizational campaigns. The affiliate member unions include the International Brotherhood of Teamsters (IBT); Labor’s International Union of North America (LIUNA); Service Employees International Union (SEIU); United Farm Worker of America (UFW); and United Food and Commercial Workers International Union (UFCW). The mission statement of Change to Win provides a clear focus—“to unite the 50 million workers in affiliate industries, whose jobs cannot be outsourced, and who are vital to the global economy.” This focus on organizing certain workers is less broad and less political than the mission of the AFL-CIO. Yet in recent years rumors that the two federations might join back together have continued to spread, but thus far the merger has not happened. Certainly the two have worked together on many issues vital to labor such as passage of the Employee Free Choice Act (See  Chapter 1 .).

Change to Win

A new union federation of national unions dedicated to growing their membership through strategic organizational campaign and improving the living standards of workers.

Independent Unions

As stated earlier, not all local unions are affiliated with a national or an international union that in turn is a part of the AFL-CIO or Change to Win. Local independent unions are characterized by smaller memberships, more limited funds, and a lower profile. Independent unions are generally not designed along either the craft or the industrial unit model, preferring to open their membership to employees of a specific professional occupation.

Profile 4-1 Rival Unions Split from AFL-CIO, End 50 Years of Unity

On the eve of the 50th anniversary of the historic 1955 merger of the two major American unions, the American Federation of Labor and the Congress of Industrial Organizations, seven national unions split from the AFL-CIO to form a rival labor organization, Change to Win Coalition. Led by the Teamsters Union and its powerful president, James P. Hoffa, the Service Employees International Union, the largest AFL-CIO union, the United Food and Commercial Workers (UFCW), and UNITE (textile, restaurant, and hotel employees) boycotted the 2005 AFL-CIO annual convention in Chicago and announced the creation of their new labor coalition. Other unions began to follow, and the AFL-CIO lost over 4 million of its 13 million members and 7 of its 56 national unions.

Why the split? At a time when organized labor is fighting to remain an important force in American society, many labor experts questioned the motive behind the split. UFCW president Joe Hansen claimed, “The world has changed and workers’ rights and living standards are under attack … and tradition and past successes are insufficient to meet new challenges.” Hansen further stated that a primary goal of the new coalition is to organize employees and bring new members into organized labor, and that the split was more about strategies than goals. The AFL-CIO in the past placed too much emphasis on backing political candidates in Washington.

A second possible cause for the split is the rivalry between AFL-CIO president John J. Sweeney, who was reelected at the convention in Chicago, and Andrew L. Stern, president of the Service Employees International Union, who had been mentored by Sweeney when he headed the union. Stern began a campaign several months before the convention to convince members of his own union and other unions to leave the AFL-CIO.

Leo Gerard, president of the United Steelworkers of America, agreed that the split was a power struggle between the two union leaders, Sweeney and Stern, and stated, “This is not about creating better lives for our children and grandchildren. This is nothing but a disguised power grab. They [the unions that split] should be ashamed of it.”

Source: Adapted from Steven Greenhouse, “Ambitions Are Fueling a Division of Labor,” New York Times (July 26, 2005), pp. A1, 17; Will Lester, “UPCW Is Third Union to Abandon AFL-CIO,” The Associated Press (July 29, 2005).

In 2005 seven national unions split from the AFL-CIO and formed Change to Win—a new labor organization focused on increasing membership in targeted industries.

Source: James Finley/AP Images.

The independent unions resemble other unions in that they do target membership, albeit often a wider target. They may hold national conventions and elect national officers, although the conventions are more frequent and seemingly more democratic among the independent unions.

Bargaining Unit Determination in the Public Sector

As discussed in  Chapter 3 , the Federal Labor Relations Authority must determine an appropriate bargaining unit for federal agencies. Borrowing from court decisions under the National Labor Relations Act, the federal law applies a community-of-interest test to identify an appropriate unit on an agency, plant, installation, functional, or other basis. At the federal level, confidential employees, managers, supervisors, and personnel employees are excluded from the bargaining unit. Professional employees are excluded from nonprofessional units unless the professional employees vote in favor of their own inclusion.

A community-of-interest test is also used in state and local governments that recognize the right of the public employees to organize. However, as many states recognize only specific groups of employees who might become organized—teachers, police officers, firefighters—determining an appropriate unit is generally moot. However, when necessary to define community of interest in the public sector, the following criteria have been developed by the Advisory Committee on Intergovernmental Relations:

1. Similar wages, hours, working rules, and conditions of employment

2. Maintaining a negotiating pattern based on common history

3. Maintaining the craft or professional line status

4. Representation rights, which involve the inclusion or exclusion of supervisors or nonprofessionals (this refers to organizations such as police or fire departments) 40

Public Sector Unions

While some unions are uniquely focused on public sector employees, such as the National Education Association (NEA), International Association of Fire Fighters (IAFF), American Federation of Government Employees (AFGE) and the American Federation of State, County and

Municipal Employees (AFSCME), many state and local government employees are represented by the same unions as employees in the public sector, including Teamsters, Service Employees International Union (SEIU) and International Brotherhood of Electrical Workers (IBEW). And while these unions can provide local organizations with assistance in organizing employees and administering agreements, the national unions are generally not able to provide any type of “master agreement” due to the fragmented nature of public sector organizations.

The Organizing Drive

The impetus to organize employees may originate from either of two general sources. First, the workers may be dissatisfied with their pay or work conditions and thus they initiate contact with the union. Although some supervisors believe that most organizing drives focus on wages and benefits, in reality most drives are caused by “soft issues,” such as employees feeling overworked and underappreciated; humiliation or harassment by supervisors, clients, or coworkers; employees’ sense of double standards for management and workers; perceived job insecurity possibly caused by the unjust termination of a worker; or simply protection from change or broken promises by management. 41

Second, a  union organizer , a full-time salaried staff member who generally represents a national union, may contact workers. As the job title suggests, the union organizer increases union membership and strength by organizing groups of workers who are not presently unionized. An  organizing drive  usually follows the series of events shown in  Figure 4-3 .

Union Organizer

A full-time, salaried staff member of a union who generally represents a national union who organizes work places to increase union membership.

Organizing drive

A movement initiated by dissatisfied employees or a union organizer to submit a representation petition to the NLRB and win a representation election, thus providing union certification and collective bargaining.

Figure 4-3

The Organizing Process

The union’s goal is to organize workers and bring them into the union. Labor’s strategy is to convince the workers that union membership will bring them benefits they do not presently enjoy. Union organizers may suggest that union representation will result in higher pay, more benefits, better working conditions, and greater fairness in promotions, job transfers, and layoffs. Speaking proudly of the benefits and work improvements they have achieved for other workers, union organizers often cite impressive and convincing statistics about wage gains achieved through collective bargaining. Labor advocates hold formal meetings at the local union hall and encourage supporters to spread the word informally about the benefits a union would bring to the employees’ place of work. Pro-union handbills and flyers are often passed to workers as they leave work or go to lunch.

If management’s goal is to keep the union out of the workplace, then its strategy may be to convince the workers that unionization will do them more harm than good. Management may attempt to ensure workers that their present pay and benefits are competitive and may show data to prove it. Emphasizing a philosophy of fair dealings with all employees, management may discuss the union’s involvement in violent or corrupt activities if such has been the case. Management also enumerates the costs of union membership, which include initiation fees, dues, and other assessments. The workers are reminded that wages will be lost should a strike occur. A discussion of how far management can go to discourage unionization and not violate the National Labor Relations Act can be found in  Chapter 10 .

There are three different methods by which a union may obtain the right to represent employees in a bargaining unit from the NLRB: (1) through a secret-ballot representation election, the most common process; (2) voluntary recognition card check by an employer; (3) an NLRB directive (in rare cases where the NLRB has decided holding a fair election is impossible).

Union Organizing Strategies

Although every workplace is different, some basic steps are involved in launching a union organizing campaign as seen in these suggestions by the Industrial Workers of the World: 42

1. Step 1 Build an Organizing Committee Identify the leaders and establish an organizing committee representing all major departments and all shifts, which reflect the racial, ethnic, and gender diversity in the workforce. Committee members must be prepared to work hard to educate themselves and their coworkers about the union and to warn and educate coworkers about the impending management antiunion campaign. The employers will most likely engage in a well-organized, well-funded antiunion campaign. The organizing committee must be educated about the workers’ right to organize and must understand their union’s policies and principles of democracy and rank-and-file control. Also at this step, basic information about the workplace must be gathered, including: the organizational structure, information about the employees, employer data and financial information, work issues of concern, and so on.

2. Step 2 Determine the Issues The committee develops a program of union demands (the improvements they are organizing to achieve) and a strategy for the union recognition campaign. A plan for highlighting the issues to the workers is carried out through various organizing campaign activities.

3. Step 3 Choose a Union Recognition Strategy Workers are asked to join the union and support the union program by achieving union status. A union recognition strategy needs to be chosen:

· Card-check recognition:  The Organizing Committee and/or a representative from the union informs the employer that a sizable majority (at least 50 percent plus one person but ideally 60 percent or more) has signed union authorization cards. If successful, the employer voluntarily agrees to recognize the union as the legal bargaining agent for the designated bargaining unit.

· Strike for recognition:  A sizable majority (at least 50 percent plus one person but ideally 60 percent or more) may agree to a short strike to force the employer to recognize the union. If successful, the employer voluntarily agrees to recognize the union as the legal bargaining agent for the designated bargaining unit.

· Call for an NLRB-sponsored election:  The Organizing Committee convinces coworkers to sign union authorization cards. This is the most common of the three strategies. The goal is to sign up a sizable majority; however, only 30 percent of the workforce needs to sign authorization cards to qualify for an NLRB-sponsored election. This “card campaign” should proceed quickly once begun and is necessary to hold a union election. If successful, the employer is legally required to recognize the union as the legal bargaining agent for the designated bargaining unit.

Secret-ballot representation election

A private, confidential vote by employees, overseen by the NLRB, which allows employees to cast their vote for or against union representation confidentially without pressure or coercion from the union or employer.

4. Step 4 Union Recognition Status To hold an NLRB-sponsored  secret-ballot  election, the signed authorization cards are required to petition the state or federal labor board to hold an election. The labor board determines who is eligible to vote and schedules the election. The union campaign continues and intensifies during the period before theelection. If the union wins, the employer must recognize and collectively bargain with the union, but is not required to agree to any issue or a contract.

Salting

In response to union membership decline, unions in recent years initiated a program commonly called  salting  . Union members are encouraged to seek employment with target companies that are not unionized. The union members receive permission from the union through “salting resolutions” to work nonunion without being subject to disciplinary action by their union.

Salting

Members are encouraged by their union to seek employment at a nonunion company. Once hired, they promote unionization. The union may supplement their regular pay to provide equity with a “union” wage.

There are three types of salting. First, in cases in which union jobs are not available, the union members are urged to seek employment at nonunion companies, and on their own time, they talk with their fellow workers about the benefits of unionizing. In these cases, the union members are not compensated by the union for their activities. A second type of salting is when union members seek employment with nonunion companies at the request of the union. Again, on their own time, they promote unionization. As compensation, the union supplements the regular pay they get from the employer to equal a “union” wage. Often, when union jobs open up or when it is clear that the company will not become unionized, the union encourages these members to move on. A third type of salting is when regular full-time employees of a union seek employment with a nonunion company for the sole reason of organizing the workers. The union makes up the difference between their organizers’ pay and what the employer pays the employees of the union while being employed at the nonunion company.

Union Avoidance Strategies By Management

In many workplaces, management’s goal is simply to keep the union out, and as the example shows in  Profile 4-2 , a company need not be shy about saying so. The strategy is to convince the workers that unionization will do them more harm than good. Management may attempt to ensure workers that their present pay and benefits are competitive and may show data to prove it.

In reality, management routinely subjects workers to threats and harassment during an organizing campaign. A review of over 1,000 NLRB elections found that it is “standard practice for workers to be subjected to threats, interrogation, harassment, surveillance, and retaliation for union

Profile 4-2 Union Avoidance Program at Walmart

Walmart, Inc., is the world’s largest employer, with over one million workers in 3,372 stores, and the world’s largest retailer, with over $220 billion in annual sales. In fact, Walmart revenues are over 2 percent of the entire gross domestic product of the United States. Sam Walton opened his first Walmart in 1962 on the philosophy of “Service to our customers.”

In 1970, the Retail Clerks Union (RCU) initiated the first serious organizational campaign of Walmart stores in Missouri. Sam Walton hired a professional union buster, John Tate, who lectured workers on the negative aspects of unions and encouraged Walton to implement a profit-sharing program. After defeating the union, Walton hired a consulting firm to develop a union avoidance strategy. Martin Levitt describes the program as “whatever it takes to wear people down and destroy their spirit. Each manager is taught to take union organizing personally … anyone supporting a union is slapping the supervisor in the face.”

In 2000, the United Food and Commercial Workers Union (UFCW) initiated a new union organizing campaign. The union won the representation election—and the meat-cutting department of Walmart in Jacksonville, Texas, became the first in the history of the company to organize a union successfully. Two weeks later, however, Walmart announced the elimination of the meat-cutting departments in all its stores and fired four of the workers who voted for the union. Dotty Jones, a former Jacksonville meat cutter, said Walmart managers held a meeting and told the employees there was nothing they could do; “they would hold it up in court until we were old and gray.”

Walmart workers face serious opposition to unionization by the retail giant.

Source: Ruaridh Stewart/ZUMA Press/Newscom.

Despite Walmart’s successful union avoidance program, in recent years workers in over 100 stores in 25 states have started organization campaigns. Why? Greg Denier, an official with the UFCW union, says, “Americans can’t live on a Wal-Mart paycheck … and Wal-Mart is the dominant employer, and what they pay will be the future of working America.” The average Walmart employee earns $18,000 a year—only about 40 percent receive health care coverage—which costs employees up to $2,844 a year plus deductibles.

Another issue is the employment of women in top store positions. Although women account for two thirds of all Walmart employees, they account for less than 10 percent of top store managers, the same percentage as in 1975.

Can unions successfully organize Walmart in the future? Not according to Bernie Hesse, a UFCW organizer in Minneapolis, who claims, “They’ll close the frigging store,” or Martin Levitt, author of Confessions of a Union Buster; “In my 35 years in labor relations, I’ve never seen a company that will go to the lengths that Wal-Mart goes to, to avoid a union.”

Source: Adapted from Karen Olsson, “Up against Wal-Mart,” Mother Jones (March–April 2003), pp. 54–59.

activity.” The study found that in 57 percent of cases reviewed employers threatened to close the business, fired workers in 34 percent of the cases, and threatened wage cuts in 47 percent, and workers were forced to attend antiunion sessions with a supervisor in 66 percent of the cases. However, the study also concluded that many such employer tactics are, in fact, legal. 43

Management “TIPS” and “FORE” in Campaigns

One company that had a corporate-wide policy against unionization instructed its managers on how to avoid unions legally by enumerating certain do’s and don’ts. These instructions have been put into useful acronyms for managers and supervisors facing union organizing campaigns as shown in  Table 4-1 . For the things a manager may not do, they are told to remember “TIPS”: threaten, interrogate, promise, and spy. Or, as the management consultant in  Profile 4-3  terms it: “SPIT”—spy, promise, interrogate, or threaten. For the things a manager may do, they are told to remember “FORE”: facts, opinions, rules, and experience. 44

Among things managers cannot do to discourage unionization are the following:

Table 4-1

Common Arguments Made by Proponents of Card-Check Recognition and Mandatory Secret Ballots

Source: Adapted from Gerald Mayer, “Labor Union Recognition Procedures: Use of Secret Ballots and Card Checks,” CRS Report for Congress (May 23, 2005), p. 13. Available at http://digitalcommons.ilr.cornell.edu/key_workplace/237/. Accessed February 21, 2008.

T—Threaten

· Don’t threaten or imply the company will take adverse action of any kind for supporting the union.

· Don’t threaten to terminate employees because of their union activities.

· Don’t threaten to close the facility if a union is voted in.

· Don’t threaten to transfer employees to other locations because of their union affiliation.

· Don’t threaten employees with loss of their wages and benefits during negotiations.

· Don’t threaten employees with loss of their job if they sign a union authorization card.

· Don’t threaten employees by saying, “With the union there will be a strike.”

· Don’t threaten to penalize employees who actively support the union for violations of company policies that nonunion employees are permitted to commit without being disciplined.

· Don’t make work assignments with the intent of causing an employee who has been active on behalf of the union to quit his or her job.

· Don’t take any action that is intended to impair the employee’s job or pay because of his or her activity on behalf of the union.

· Don’t intentionally assign work or transfer employees so that those active on behalf of the union are separated from those you believe are not interested in the union.

· Don’t reduce hours of employees with the intention of curtailing the union’s strength of organizing.

I—Interrogate

· Don’t interrogate or ask employees their position concerning unions.

· Don’t ask employees how they are going to vote in an election.

· Don’t ask employees if they or anyone else signed a union authorization card.

· Don’t ask employees if they are going to the union meeting or who else may be attending.

Profile 4-3 Union Buster

Peter List’s job title is not “union buster,” but that is how many of his employers refer to him. List is hired by employers to persuade workers not to join a union because it is not in their best interests. His background is surprising. For eight years his career was handling heavy spools of telephone cable on the factory floor of an AT&T factory in Phoenix, Arizona. He joined the Communications Workers of America his very first week at AT&T, rose to the rank of chief shop steward within the union, and edited the local union newspaper.

Today, however, List is hired to fight union organizing campaigns, and in 2003 he won 32 of 35 campaigns. List estimates that 60–70 percent of his clients are small business owners because unions have sought to organize more small businesses in recent years, and he averages a 57 percent “win rate” against them. Why did List switch sides? In 1992, AT&T outsourced his job to Mexico and thus he went back to college to complete a degree in labor relations. In his senior year he had an “epiphany” when researching a thesis on the history of unions. List decided unions blamed their decline on everyone—but themselves. He developed a strong pro-capitalist Ayn Rand philosophy of radical individualism and opposed all governmental regulation of labor relations. List then started his own company, the North American Employers Group, which advises employers who are engaged in an organized campaign.

For example, in 2001, the Teamsters collected authorization cards from a majority of 35 employees at Mazza & Sons in Tinton Falls, New Jersey. The recycling and demolition firm had hired a “salt,” or Teamster member, who began organizing from the inside. The company had not given workers a raise in several years and thus was vulnerable. The Teamsters began picketing Mazza & Sons and created what Dominick Mazza called a “battle zone” that disrupted business. Mazza called List, who immediately started distributing handouts to the employees. List also coached Mazza on what he legally could and could not say or do during the organizational campaign. He emphasized that a manager or owner should never “SPIT” on workers: Spy, Promise, Interrogate, Threaten. In addition, List suggested that managers explain critical facts such as these: If a union is certified, management is under no obligation to sign an agreement; if negotiations reach an impasse, management has the right to impose its final offer unilaterally; and if the workers strike, management can hire permanent replacement workers. After a few months the picketing stopped, and the Teamsters lost interest in Mazza & Sons.

Source: Adapted from Richard Murphy, “The Persuaders,” Fortune Small Business 14, no. 4 (May 2004), pp. 74–82.

· Don’t ask employees their opinion of the union organizer.

· Don’t visit employees’ homes for the purpose of asking questions about the union or urging them to reject the union.

P—Promise

· Don’t promise employees a pay increase, better benefits, or special favors if they vote against the union.

· Don’t promise employees a promotion if they vote against the union.

· Don’t promise employees that all the concerns they brought to management before the election will be corrected to their advantage if they vote against the union.

· Don’t engage in favoritism of employees who are antiunion.

S—Spy

· Don’t spy on any union activities the employees may be involved in, such as attending union meetings.

· Don’t attend a union meeting, even if invited.

Among the things managers can do to discourage unionization are the following:

F—Facts

· Do tell employees that by signing a union authorization card, they may have authorized the union to become their legal representative in all matters pertaining to wages, hours, and working conditions.

· Do tell employees that if they sign a union authorization card, it does not mean they must vote for the union in an election. An election is a secret-ballot process.

· Do tell employees that if a union is voted in, everything (their wages, benefits, and working conditions) would go on the bargaining table. It is much like the game show Let’s Make a Deal! They could get more, they could get the same, or they could get less. Regardless, they will be responsible for dues, fees, fines, and assessments.

· Do tell employees that they can actively campaign against the union—you just cannot help them in any manner.

O—Opinion

· Do tell employees that management does not believe the employees need third-party representation.

· Do tell employees that management believes in the open-door policy and are willing to discuss any subject with them.

R—Rules

· Do tell employees that the law permits the company to permanently replace them if there is a strike.

· Do tell employees that the union cannot make the company agree to anything it does not want to during negotiations.

E—Experience

· Do share any personal experiences you may have had with a unionized workplace.

Countersalting Steps

Companies that have been “salted” have also come up with countermeasures. For example, one company suggests that employers take the following steps to prevent hiring “salts”: 45

1. Prescreen as many applicants as possible to ensure you are hiring the most qualified person for any opening you have available. The National Labor Relations Act prohibits an employer from refusing to hire an applicant because of his or her union affiliation. However, the law does not prevent a company from selecting the most positive, dedicated, and enthusiastic applicant available.

2. Use “consensus” interviewing. Several members of management should interview applicants and then compare notes and recommendations for hiring.

3. An application should say, “List entire employment history, starting with present employer. For any unemployed or self-employed periods, show dates and locations. (Attach additional sheets when necessary.)” If there are only three spaces on the application to list existing or former employers, ask applicants if they have completed their entire employment history. If they have not, ask them to attach additional sheets.

4. Ensure that applications show entire work history with no gaps in employment. If you notice gaps, question them. Then ask applicants to fill in those gaps.

5. Check references thoroughly.

Organizing At The Workplace

The right to engage in organizational campaigns in and around the workplace obviously affects the employer’s right to maintain a work environment. The NLRB and the courts have devised rules to balance the two interests. Here, briefly, are some of those rules. In  Chapter 10  we discuss how violating these rules lead to charges of unfair labor practices either against the employer or a union.

Soliciting Union Support

Employees on their own time, even on the employer’s property, can solicit union support by talking about the union. This includes lunchtime, break time, rest periods, and before and after the regular workday. A nonemployee, usually a union organizer, does not have the right to solicit union support on the employer’s property if there is  any other means  to reach the employees.

· Distributing Union Material.  Distribution of union literature is restricted to nonworking times and areas because such literature could clutter the workplace. No rule, however, is without exceptions. If justified by the nature of the business, a no-solicitation rule restricting employees even on nonworking time can be defended. Examples include department stores, restaurants, and patient care areas of hospitals where the public nature of the working area would prohibit normal interaction between employees, so that leaving literature is allowed.

· Union Buttons or Insignias.  Employees may wear union buttons or insignias. This right is balanced against the employer’s right to conduct business. If a button or insignia should in particular circumstances cause a disturbance, present a health hazard, distract workers, cause damage to a product, or offend or distract customers, it may be prohibited.

· Bulletin Boards, Meeting Hall, and Mailboxes.  Employees have no statutory right to use an employer’s bulletin board, meeting halls, or mailboxes. However, if the employees are allowed access to the bulletin board, the employer cannot censor the material to exclude union solicitation. Meeting halls fall under the same rule. If access has been allowed to employees on an unrestricted basis, use by employees for union organization cannot be the only exception.

· E-mail Solicitation.  Employees may use company e-mail for discussions relating to wages, hours, and working conditions, assuming the use does not violate a legitimate employer policy regarding the use of work time or equipment.

· No-Solicitation Policy.  An employer may implement a “no-solicitation” or “non-use” nondiscriminatory policy for both employees and nonemployees during work or nonwork hours in the workplace and restrict the use of bulletin boards, meeting halls, e-mails, and mailboxes if that policy extends to all types of solicitation. If it is applied only to union solicitation, it is likely to be an unfair labor practice. However, the NLRB has created a distinction between allowing employees personal use such as “for-sale” notices or birthday announcements and allowing organizational purposes such as union material.

Picketing During an Organizational Campaign

During an organizational campaign, the “target-employer” is the primary employer. Under the act, a union can picket a primary employer but for only 30 days before being required to file a petition for an election with the NLRB. Mass picketing, violence, or threats of violence are not allowed; nor is secondary picketing—picketing a neutral party in order to have that neutral party pressure the targeted employer on the union’s behalf. If the employer shares premises with other neutral employers,

Table 4-2

Union Organizing Campaign: TIPS and FORE

in “informational” picketing that is simply informing the public that the target employer does not pay union wages.

Table 4-2  outlines some of the common issues in pickets.

Representation Election Procedures

While there are three different methods by which a union may become the representative of a group of employees for the purposes of collective bargaining, the most common is the secret-ballot election. Why? It has been called, by supporters, “the gold standard” of providing employees freedom of choice—as to whether or not they want union representation. The steps in a secret-ballot representation election are described in the following paragraphs.

1. Step 1 Representation Petition The first step in the election process is to file a representation petition at the office of the appropriate regional director (see  Figure 4-4 ). A union must present evidence of employee support before a representation election is held. The NLRB requires designation by at least 30 percent of the bargaining unit employees, usually in the form of signed and dated authorization cards. The NLRB also accepts designations in the form of signed petitions and union application cards. 46

Board actions have several kinds of petitions. An employee, a group of employees, or a union representing employees can file an RC petition seeking certification of an appropriate unit. An employer can file an RM petition if one or more labor organizations claim representation status in an appropriate unit and the employer questions the representative’s status. Also, when an employer has objective proof that the union no longer represents the majority of the employees, he or she may file an RM petition. An employer, employee, other individual, or a union may also use a decertification or RD petition to determine whether a recognized union still has the support of employees.

Other types of petitions available are the UD petition, which 30 percent or more of the employees file to rescind a union shop agreement; a UC petition, requesting clarification of the composition of a bargaining unit currently certified; and an AC petition, requesting that a change of circumstances be recognized, such as a change of union name or affiliation on a previous NLRB certification.

Petitions demonstrate sufficient employee interest or the actual type of representation case so that the board may decide if it has jurisdiction. The board assumes the requisite employee interest and accepts an expedited election petition if it is filed within 30 days of the beginning of a recognitional or organizational picket. The board normally accepts petitions requesting certification or decertification only if 30 percent of the employees in a unit favor such an election. Presenting cards authorizing the union to act as the employees’ agent for collective bargaining usually demonstrates this 30 percent. It can also be shown by a certification listing at least 30 percent of the employees of the represented unit as members in good standing of a union.

Another union may enter an election with a  showing of interest  that represents 10 percent of those in the unit in question. A cross petition from another union may also be filed claiming representation of an appropriate unit different from the original unit but including some of the same people. 47

Showing of interest

The demonstration of employee support, usually in the form of petitions or authorization cards, that a union is required to compile before a representation election can be considered.

2. Step 2 Investigation The second step occurs when the regional director conducts investigations and a hearing, if necessary, to determine whether to proceed with an election. The employer’s business must sufficiently affect commerce so as to rest jurisdiction in the NLRB. An actual representation question must exist, and sufficient employee interest must be demonstrated. The requested unit is deemed appropriate and the bargaining agent qualified. Certain statutory time periods must be honored.

Figure 4-4

National Labor Relations Board Petition

Figure 4-5

Request to Proceed with an Election

Once the NLRB has determined an election petition is valid, the employer is obligated to furnish to the petitioning union a list of eligible voters’ names and addresses. In an unusual case, the union requested e-mail addresses because the bargaining unit members were crew members on a ship and would be at sea during the preelection period. 48

3. Step 3 Secret-Ballot Election The third step is the secret-ballot election (see  Figure 4-5 ). The NLRB has the responsibility to ensure that a representative election is fairly and honestly conducted. In a 1948 case, the board stated that its function in representation proceedings was “to provide a laboratory in which an experiment may be conducted, under conditions as nearly ideal as possible, to determine the uninhibited desires of the employees.” 49  But the board recognized that the standards for election cases had to be judged against realistic standards of human conduct. When improprieties occur, certain factors should be weighed, such as the size of the unit, the circumstances of any alleged misconduct, and the real or apparent influence of the interfering party.

The NLRB has traditionally favored direct or manual ballots (voting machines, voting boxes, etc.) over mail ballots in representational elections. The board’s policy has been to use only mail ballots when manual ballots are “infeasible.” Manual ballots are favored because they provide (1) greater secrecy, (2) integrity of the voting process, (3) absence of coercion, and (4) greater participation by employees. Mail balloting is cheaper than manual balloting, but the National Labor Relations Act clearly states employees should be given a “free choice” in representational elections, which can be more easily guaranteed in manual balloting. Yet in recent years the NLRB has used mail balloting more often, establishing appropriate procedures to ensure the fairness and validity of the election. These include precise procedures for casting and returning the ballots, and when those procedures are not followed, the election may be set aside. For example, the election was set aside in a runoff election between two unions, because a union representative collected the ballots from the employees rather than have the ballots mailed in as directed. 50

Doctors and medical professionals gather to protest against Congress’ and President Barack Obama’s health care reform efforts during a rally at the U.S. Captiol September 10, 2009 in Washington, DC. Organized by The Association of American Physicians and Surgeons, the rally drew about 150 people in lab coats and surgical scrubs.

Source: Chip Somodevilla/Getty Images.

Prohibited Conduct During an Election

Through its rulings over the years, the NLRB has determined that activities that constitute violations of the act, or prohibited conduct while an election is being conducted, include the following:

1. Campaign propaganda and misrepresentation  Campaign rhetoric by either side is routinely ignored because it is part of any election campaign and usually will be disregarded by employees in making decisions. But the NLRB would intervene in cases in which forgery or misleading information is rendered in such a way that the voters are unable to discern the propagandistic nature of a publication.

2. Threats and loss of benefits  Unlike mere campaign rhetoric, the actual reduction or withholding of benefits or the direct threats of economic reprisals as a method of combating an organizational drive is prohibited. These include discharge, loss of pay or benefits, more onerous working conditions, and threats of plant closure, physical violence, or permanent replacement of strikers.

An employer is not prohibited from communicating general views about unionism or predictions of the effect of unionization on the company as long as such predictions involve consequences outside the employer’s control.

3. Promise or grant of benefit  The promise of economic benefits by the employer if employees reject unionization will violate the National Labor Relations Act, as will the promise or grant of economic benefits during an organizational campaign to influence the outcome of an election or to discourage organizational activities. However, the granting of benefits during a union campaign may not interfere with the employee’s right to organize when the timing, amount, and application of the increase were consistent with past practice.

4. Interrogation and polling of employees  Absent unusual circumstances, the polling of employees by an employer is prohibited unless the following safeguards are observed: The purpose of the poll is to determine the truth of a union’s claim of majority—this purpose is communicated to the employees, assurances against reprisals are given, the employees are polled by secret ballot, and the employer has not engaged in unfair labor practices or otherwise created a coercive atmosphere.

A long-standing NLRB precedent provides that an employer who entertains a good-faith reasonable doubt whether a majority of its employees supports an incumbent union has three options:

· To request a formal board-supervised election

· To withdraw recognition from the union and refuse to bargain

· To conduct an internal poll of employee support for the union

5. Surveillance  Surveillance in almost any form has been held a violation of the unfair labor practices section of the National Labor Relations Act. The board has such an aversion to surveillance that it will uphold findings even if the employees know nothing about it or the surveillance was only an employer’s attempt to foster an impression of scrutiny. Encouraging surveillance and eavesdropping by union members has also been condemned by the NLRB.

6. Poll Activity  The NLRB prohibits any electioneering at or near the polls in a campaign. And in a 1953 case, Peerless Plywood Co., 51  the board detailed a 24-hour rule, which prohibits employers and unions from making organizational campaign speeches on company time to large assemblies of employees within 24 hours of a scheduled election. It does not prohibit voluntary assemblies on or off company time or the distribution of written material.

In cases in which an election involves three choices—for example, Union A, Union B, or no union—a  runoff election  may be required if none of the choices receives a majority of the votes cast. The two top vote getters are placed before the members of the bargaining unit again, and the one receiving a majority vote can be certified:

Runoff election

The successive election held when a representation election involving three or more choices results in no one choice receiving the majority vote. The choices receiving the most votes are again voted on until one receives the majority of the votes cast.

Under NLRB rules and regulations, “A runoff election is conducted only where: (a) the ballot in the original election contained three or more choices [i.e., two labor organizations and a neither choice]; and (b) no single choice received a majority of the valid votes cast. Thus there can be no runoff where the original ballot provided for: (1) a yes and no choice in a one-union election; or (2) a severance election.” The ballot in the runoff election provides for a selection between the two choices receiving the largest and second largest number of votes in the original election. 52

In 2002, for example, a representation election was held for office and service employees at the University of Baltimore. The initial ballot had three options: (1) no representation, (2) AFSCME, and (3) the MCEA, a local independent union. None of the three won a majority, and thus a second, runoff election was held, and AFSCME won with 64 percent of the runoff vote to 35 percent for MCEA. 53

4. Step 4 Certification of Election Results If the board is satisfied that the election represents the employees’ free choice, the election is certified, the fourth step. Either no union is victorious or, if a union has gained a majority of those voting, that union is certified as the bargaining agent for the unit. If, however, the NLRB finds that the preelection period did not meet the “laboratory conditions” doctrine as it enunciated in the General Shoe  54  case, then the election result can be declared void. The NLRB describes “laboratory conditions” during the preelection period as those that provide employees an atmosphere in which they have a “free choice” of being represented by a bargaining representative or not. In general, the NLRB has found that actions that violate the “laboratory conditions” fall into three categories: coercion, threats of reprisal, and promises of benefits. 55

Certification  benefits a union in a number of ways. It closes any challenges to the union’s status as the exclusive bargaining agent for the particular unit. Its status is binding on the employer for at least one year, during which time the employer must bargain with it. After the first year the employer must continue to bargain unless there is reasonable doubt that the union will continue to enjoy a majority vote of the unit. The board will not entertain petitions regarding rival certification for that unit within the one-year certification or within three years if a valid contract is in effect. The certified union may strike against the employer under certain circumstances without fear of an unfair labor practice charge. A 2005 study of newly certified bargaining units found that about 90 percent of the time the union was successful in negotiating the first contract with the employer within the first year. In previous years between 1996 and 2003, the annual success rate ranged between 73 and 95 percent, with a trend of higher rates in recent years. In previous decades the annual rates were as low as 60 percent. First contract negotiations are often more contentious than renewals because the NLRA provides no penalty for failure to reach a contract and no mandate for mediation. 56

Certification

The determination by the National Labor Relations Board that a union represents the employees’ free choice and therefore that the union can become the official bargaining agent for a bargaining unit.

The number of representation elections held each year varies greatly by state. In 2009, for example, the five states with the most elections were New York, 214 (61.2 percent won by the union); California, 165 (67.8 percent); Illinois, 110 (63.6 percent); New Jersey, 99 (57.5 percent); and Pennsylvania, 85 (62.3 percent). The states with the fewest elections were Nebraska and Vermont, both with 5; South Dakota 4, Maine 3, Wyoming 2, and North Dakota, 1. In all 50 states and territories 1,633 representation elections were held in 2009, and unions won 63.8 percent. 57

A union may seek recognition by the board to obtain the benefit of certification even if its status as an exclusive bargaining agent has not been challenged and the employer has agreed to bargain. The NLRB considers such a request as raising a question of representation.

Voluntary Recognition

Election, although the most accepted way by which employees select their representatives, is not the exclusive method condoned by the NLRB. An employer may recognize the union as the bargaining agent without an election: This  voluntary recognition  is rare but increasing in use by some unions. By publicity, picketing, friendly politicians, or boycotts, these unions pressure employers into recognizing a union without an election. In one such 2001 case, the Union of Needletrades, Industrial and Textile Employees, with the support of hotel and medical center workers (major clients of the targeted employer and the Baltimore City Council), convinced the laundry to recognize the union voluntarily and then negotiated a $1.25-per-hour raise for the $6-per-hour employees as well as better health and pension benefits. 58  As another example, in 2002, the University of California at Los Angeles (UCLA) voluntarily recognized AFSCME to represent food and service workers. The university agreed to recognize the union after several weeks of student and worker protests and a heated UCLA board meeting. AFSCME represents over 15,000 food and service workers on nine University of California campuses and five medical centers. 59

Voluntary recognition

An employer recognizes a union as the bargaining agent of the employees without requiring a secret ballot election.

In a Supreme Court decision upholding a board bargaining order, the Court recognized two other valid means by which a union may establish majority status and thereby place a bargaining obligation on the employer: (1) through a show of support through a union-called strike and (2) when a union collects authorization cards from a majority of the unit members. The cards must be submitted to a third party for a “card check” to verify the names against payroll. If an employer agrees to the card check, then, if the third party finds a majority for the union, the employer must bargain. 60  In recent years employers agreeing to a card check include UPS, Cingular Wireless, Costco, Harley Davidson, Kaiser-Permantee, Hilton Hotels, Marriott, Freightliner, and Rite-Aid. Examples of Union Authorization Cards can be seen in  Figure 4-6 . Some labor experts believe that NLRB-conducted secret-ballot elections are “the gold standard” of employees’ freedom of choice and view the card-check process as open to manipulation. They believe the  neutrality/card-check recognition  agreement process creates a tension between two

Neutrality/card-check recognition

The employer and union agree in advance—before the union obtains cards signed by a majority of the employees—that the parties will use a card check by a neutral third party as a means of determining majority support and the employer will voluntarily recognize the union if the card check shows majority support for a union.

Figure 4-6

Typical Union Authorization Cards

important principles of federal law: the freedom of employers and unions to sign contracts and employee-free choice of union representation. 61  A neutrality/card-check agreement generally includes a statement from the employer indicating that it will remain “neutral” during the card drive, not oppose union organizing efforts, and recognize the union once it has obtained signed cards from a majority of employees. However, the agreement may also contain terms that equate to unlawful prerecognition bargaining that is a violation of the NLRA. For example, in 2006, several parties questioned the neutrality agreement between the UAW and Dana Corporation. The agreement contained, in addition to Dana voluntary recognition based on a majority of signed cards, certain “principles” that would be contained in the future collective bargaining agreement, including four-year terms, no-strike/no-lockout language, health care premium sharing and maximum deductibles, and flexible compensation programs. Those parties that supported the NLRB decision to accept the agreement as lawful contended that it was a “constructive, problem-solving” framework, an important step in implementing employees’ “freedom of choice,” and that it would help conduct the organizing drive by providing specifics to the employees before they sign cards. Opponents, however, claimed the principles amounted to the prenegotiation of mandatory issues by a union that has not been certified to represent the employees. In addition opponents note that such principles may encourage employers to seek a preferred union that will agree to a “sweetheart deal” that is not in employees’ best interests. 62

Legislation was introduced in the 109th Congress as a result of the movement by unions to seek voluntary recognition in all representation cases. The Employee Free Choice Act would amend the card-check process by placing a bargaining obligation on an employer if a majority of workers sign cards authorizing union representation. Thus the employer could not insist on a secret-ballot election, as is the case currently. Supporters of the bill claim: “It should be the employees’ choice (for a secret-ballot election), not the employers’, and that is really what the heart of this bill is all about.” Opponents, however, claim the change in the card-check process would subject workers to intimidation from unions because they would be forced to make their preference known. 63  The pros and cons of card-check recognition versus a secret-ballot election are summarized in  Table 4-3 .

NLRB Directive

The third method by which a union may be certified to represent employees (in addition to election and voluntary recognition) is by an NLRB directive. Such cases are rare and only occur in situations where the NLRB has determined that an impartial election in which employees can express their “free choice” is not possible. The cases usually involve employer interference in a secret-ballot election that makes holding a second fair and impartial election unrealistic. Such NLRB directives are called a “Gissel bargaining order,” based on a landmark 1969 case. 64

In the Gissel case, the Court gave a stamp of approval for authorization cards as a substitute for an election when an employer’s actions amounted to an unfair labor practice. The Court recognized that if traditional remedies could not eradicate the lingering effects of the employer’s conduct and permit the holding of a fair election, the union’s authorization cards were a more reliable indicator of the employees’ desires than an election, and a bargaining order should be issued. Known as the  Gissel Doctrine , the board is strictly limited in imposing a Gissel bargaining order to cases in which the union actually gained majority status through the authorization cards. Regardless of how outrageous the employer’s actions, unless such a majority is demonstrated, no order to bargain can be issued. 65  The board has also issued bargaining orders when the employer has gained independent knowledge of the union’s majority status or has acknowledged the union’s right to represent employees or, as in Case 4-2, when it is demonstrated that the employer hoped that if it ignored the union, it would just go away.

Gissel Doctrine

The Supreme Court decision that allows the use of authorization cards as a substitute for a certification election when an employer shows unfair labor practices and when the results of an election may be unreliable.

First Contract Bargaining

Once the NLRB has certified a union as the bargaining agent for a unit, then bargaining for an initial contract begins. For both sides, negotiating a first contract is, according to NLRB General Counsel Ronald Meisburg, a “critical stage of the negotiation process because it forms the foundation for the parties’ future labor–management relationship.” Unfortunately, the initial bargaining sessions are often heated because the parties recently completed a contentious election. In many cases the employers’ negotiators don’t want to be at the bargaining table and are well aware they cannot be forced to accept any proposal. Thus, heated first contract negotiating sessions may lead to charges of unfair labor practices being filed with the NLRB (discussed in detail in  Chapter 10 ). During initial contract negotiations, almost half of all employers refuse to bargain. The NLRB protects the “free choice” that the employees have expressed in the recent election designating the union as its bargaining representative and thus may seek an interim court injunction under  Section 7  of the National Relations Act against the employer. About 28 percent of the employer refusal to bargain cases filed during first contract negotiations are found “meritorious.” 66

Table 4-3

Organizational Picketing Issues

Type of activity	Purpose	Restrictions	Reasoning
Organizational Picketing/ Leafleting of Targeted Employer	Purpose is to force Employer to recognize or bargain with Union or is to force employees to accept the union as their collective bargaining representative	May not exceed 30 days without filing for recognition with NLRB; or if Employer has recognized another union; or if valid election held within 12 months	Must show actual organizing activity by having sufficient employee interest in unionization
Informational or Publicity Picketing	Purpose to advise the public that the Employer does not employ union members; or have a contract with a union; or pay union wages	Message must be truthful, picketing is directed to the public and not employees and can’t interfere with other parties coming and going	Rights are based on First Amendment Free Speech
Secondary Picketing (Hot Cargo)	Purpose is to force a nontargeted employer not to do business with Targeted Employer	ONLY allowed in construction industry and garment industry; Otherwise is ULP by Union	Unions shouldn’t be allowed to embroil a neutral employer in a dispute between Union and Targeted Employer
Secondary Picketing at a Construction Site (Hot Cargo)	Purpose is to force a nontargeted employer not to do business with the Targeted Employer	If both employers share a site, Union must target entrance used by Targeted Employer (Separate Gate Doctrine); unless nontargeted employer is “essential” to the operations of the Targeted Employer, then the Union can direct picketing at it as well	If Unions cannot picket at locations with “shared” activities, then being able to reach a construction employer would be nearly impossible
Leafleting	Peaceful, consumer handbilling without pickets, to convince consumers to boycott the Targeted Employer	Can’t include picketing or targeting only employees of nontargeted employer	Rights are based on First Amendment Free Speech
Bannering	Holding a large banner publicizing the dispute to force nontargeted employer not to do business with Targeted Employer	Can’t include picketing or targeting only employees of nontargeted employer	Rights are based on First Amendment Free Speech

CASE4-2 Authorization Cards Honored Four Years after Signing

The company operates a plastics recycling facility. Its business is to recycle used plastic containers into plastic pellets that are then sold as raw material to manufacturers. The company employed 64 people at its inception and reached a peak workforce of 92 in February 1994. At the time of the events that were the subject of the instant complaint, the company employed 68 nonsupervisory employees, but since then the workforce has dwindled to 36.

In the fall of 1994, some of the company’s employees contacted the International Ladies Garment Workers Union (ILGWU). In early October, the ILGWU began a campaign to unionize the company’s workers. In January 1995, the company laid off 29 employees and then another 10 in July. Since 1995, the workforce of the company has remained at around 35 employees.

The ILGWU filed a charge with the NLRB, alleging various unfair labor practices, including charges that the layoffs were motivated by a desire to quash the unionization campaign. The general counsel of the NLRB issued a complaint against the company on March 21, 1995. The complaint was heard in 1995 and a decision issued in 1996. The administrative law judge (ALJ) found that the company had committed numerous violations of the NLRA and recommended the imposition of a bargaining order under the Gissel doctrine. The company timely appealed the ALJ’s decision to the NLRB.

For some unexplained reason, the NLRB did not issue its decision and order until 1999, more than three years after the ALJ’s decision. The board affirmed the ALJ’s findings. The board agreed with the ALJ that the severity of the company’s conduct required the imposition of a bargaining order under Gissel. Under the bargaining order, the company was directed to bargain with ILGWU’s successor union, the United Needletrades, Industrial and Textile Employees (UNITE).

When the board’s order was issued, the company’s original attorney on this matter had retired, and the company was in the process of finding a replacement. The company filed a motion to reopen the case, arguing that circumstances had changed since the ALJ’s decision, including the restructuring of its business, a high turnover rate (only five employees who were working at the time of the complaint still worked for the company), and the passage of four and a half years. The company asked for reconsideration of the bargaining order in light of these changed conditions. The board refused, and the company contested the order in court.

Decision

Courts are almost unanimous in holding that the NLRB must take current conditions into account when it determines whether to issue a bargaining order under the Gissel doctrine. Relevant changed circumstances include passage of time and turnover in the workforce. If the board had before it evidence that circumstances at the company’s plant were in relevant respects significantly different from those at the time of the ALJ’s decision recommending a bargaining order, the board erred when it refused to take the changes into account in determining whether a bargaining order should issue.

However, the Court found that the board was not required to seek out changed circumstances. Both the company and the NLRB agreed that the board’s procedural rules would have permitted the company to update the record at any time after the ALJ’s recommendation and prior to the board’s decision. The company made no such motion until a month after the board’s decision. The Court held that the party seeking to benefit from changed circumstances bears the burden of providing the information to the board. The board is entitled to assume, in the face of the party’s silence, that the facts are as initially presented. Because the changes to the company were gradual over a number of years and not a sudden event, the company had no excuse for its failure to so inform the NLRB.

Source: Adapted from NLRB v. U.S.A. The Company Corporation, 168 LRRM 2897, (2001).

Decertification Elections

Also allowed under the act and supervised by the NLRB are decertification elections, whereby the members of the unit vote to terminate an existing union’s right to represent them in collective bargaining. The NLRB honors a bar to a decertification election within the first year of representation after a secret vote election to give a new union time to reach agreement with the employer. Decertification elections most commonly occur, therefore, when the initial year of union representation ends with no collective bargaining agreement. If there is a valid contract in place, then a decertification petition can be filed within 60–90 days of its expiration, or if a contract has expired and no new agreement is being negotiated. The NLRB, in 2007, modified prior board rulings and held that voluntary recognition, unlike a secret-ballot election, does not bar a decertification petition from being filed by employees or a rival union for the first year after the recognition. The majority opinion stated that the “uncertainty” surrounding voluntary recognition based on an authorization card majority, as opposed to an election, justifies delaying the election bar for a brief period—45 days—during which unit employees can decide whether they prefer a board-conducted election. 67

The rules for a  decertification election  are similar to those for certification, with some exceptions. Only employees can file a decertification petition, which must include 30 percent of the eligible members of the unit. Again, the NLRB investigates the validity of the petition. If the union feels there is a problem with the petition or that an employer has unlawfully helped in the petition, it may file a blocking charge and delay the election until the unfair labor charge is resolved. And, similar to when a majority of employees sign recognition cards, the NLRB has accepted a petition to decertify a union signed by more than 50 percent of the employees in the unit without an actual election. 68

Decertification Election

The process of removing a union as the certified representative of employees within a bargaining unit. A secret-ballot election is conducted by the NLRB to determine a majority opinion.

Although an employer can in no way aid the filing of a petition, afterward, the employer, the employees who filed the petition, and the union may all engage in an election campaign. The rules for conducting a decertification election are the same as those for a representation election.

After the votes are counted, if a majority of the employees vote against the union, it is decertified. A tie vote counts against the union because it no longer enjoys a majority status. If the union wins, it continues to represent the unit, and another election is barred for at least a year. Why do workers vote to decertify their union? One or more of the following factors are usually present in situations in which unions are decertified:

1. The employer has recently treated employees better.

2. The employer waged an aggressive antiunion campaign.

3. The employer moves to a traditionally nonunion geographic area.

4. The union is perceived by a majority of its members as being unresponsive.

5. Female, minority, and younger workers lose confidence in the union because of its declining public image and aging leaders. 69

The decertification election or representatives’ decertification (RD) is similar to, but different from, a  deauthorization election  or union deauthorization election (UD). In a UD, the bargaining unit members decide if they want to nullify the union shop provision in their agreement. Thus if a union loses a UD, the union still represents the employees in the bargaining unit and the rest of the collective bargaining agreement remains intact. However, if a union loses an RD election, it no longer represents the employees in the bargaining unit, obviously a much more serious outcome. The UD election process in the NLRA is unique in that a majority of the employees in the bargaining unit must vote to rescind the union shop provision, compared with only a majority of those voting required in certification and decertification elections. 70

Deauthorization Election

The bargaining unit members decide if they desire to nullify the union shop provision in their agreement, which must be passed by a majority of the bargaining unit members. Thus if a union loses a deauthorization election (UD), the union still represents the employees in the bargaining unit and the rest of the collective bargaining agreement remains intact, but emloyees are not required to join the union.

A 2003–2004 study by Clyde Scott and Edwin Arnold of decertification (RD) elections and deauthorization (UD) elections as well as certification of representation (RC) elections for a 40-year period (by decades, 1959–1998) indicated a few election trends: (1) although decertification (RD) elections and deauthorization (UD) elections together account for under 20 percent of all elections held by the NLRB, the percentage of RDs more than tripled (from 5.6 to 16.5 percent) and the percentage of UDs more than doubled (from 0.8 to 2 percent); (2) the number of RD and UD elections peaked in the 1980s (RD = 18.7 percent, UD = 2.8 percent); the number of representation elections (RCs) peaked in the decade of the 1970s (133,506) and fell by over half during the 1990s (61,515); (3) union victories in RDs rose from 34.8 percent during the 1960s to 56.5 percent during the 1990s while union victories in UDs remained stable around 31 percent; (4) unions were generally more successful in winning UD and RD elections in larger bargaining units. 71

Representation Elections in the Public Sector

Although modeled after private-sector campaigns, union elections conducted in the public sector have some differences. Public-sector employers may not be able to prohibit nonemployee union agents’ access to the workplace because the workplace is a public area. 72  Rules governing public employer preelection activities during an organizational campaign generally mirror private-sector restrictions, although some state and local governments have encouraged less restrictive standards, particularly when applied to employers expressing an opinion on the effect of unionizing. In effect, this approach balances the employer’s right of free speech with its duty not to be coercive. 73

Exclusive Representation

When a labor union is recognized as the exclusive bargaining agent for a unit of employees, two major issues come into play. The first is union security, which is preserving the union’s continued representation of the employees. The second is what representation by a union means to an individual employee.

Exclusive representation  is both a practice and a principle of law. The practice predates the law. As discussed in earlier chapters, the very roots of the labor–management relationship depended on the workers’ agreement to join together to make demands on the employer. Without such solidarity, employers would have gone to other workers willing to work for what the employer wanted to pay. Before this practice became law in the Wagner Act, labor organizers and union members had to “strong-arm” some employees who might otherwise break ranks.

Exclusive Representation

Having been certified as the collective bargaining agent for a particular unit, the union has the legal right to bargain for all the employees within the unit, nonunion as well as union.

Because part of the goal of the Wagner Act was to eliminate labor unrest, the lawmakers agreed that if a majority of the employees working in a defined unit voted to be represented by a union, then all the employees would be covered. This rule gives real power to the union’s bargaining position and simplifies the bargaining process. The value of exclusive representation in negotiating collective bargaining agreements cannot be overemphasized. Without it, the process simply does not work. If even a few employees ignore the union and gain individual benefits from the employer, the need for a union can be questioned. Likewise, if individual members of a bargaining unit take unsanctioned action, an employer’s confidence that the union can speak for the workers is undermined. For example, if employees engage in a wildcat strike, the agreement the union made not to strike in exchange for gains at the negotiation table becomes meaningless. And if exclusive representation was not the rule, the administration of a contract among like employees in an inconsistent manner would be disruptive to the labor–management relationship. 74  What are the keys to a union successfully organizing a workplace, and the keys to management successfully resisting a drive? The “Tips from the Experts” are provided by experienced labor and management professionals.

Tips from the Experts

Union

A union organizer can generate sufficient interest at a workplace to organize employees in the three following ways.

Organizing at the workplace is not much different from organizing in the community, on campus, or anywhere else for that matter. The key to successful organizing efforts is finding the connection between the prospective “members” and the “organization” seeking their allegiance. For employees, traditionally this connection was easy: better compensation for their labor, health benefits, and job security. Today, this connection must be based on other things as well. The basics exist for many workers, whether by existing collective bargaining or by legislation. Where the basics do exist, the emphasis must shift to (1) employment security, (2) employee–employer partnership in providing quality products and services, and (3) employee political power in the elective and legislative processes. It is necessary to find out what the workers want and to show them how the union is the vehicle for attaining what they want.

Management

What are three ways an employer can legally discourage employees from organizing?

a. Good communication, from suggestion programs (boxes for employees to write questions to be answered by top management, e.g., Winn-Dixie’s “I want to know” program, in which the chief executive officer personally responds to any question within 24 hours; anonymous questions can be answered in company newsletters or publications specifically geared for that purpose) to reward programs. In the latter, employees compete for the best idea for cost-cutting or similar measures to simply training supervisors in how to best field questions and issues around which union organizing attempts focus and how to proclaim the company’s union-free philosophy without interrogating the employee in the process.

b. Active participation, from joint employee–management quality teams dealing with specific workplace issues to bonus incentives for every employee when both the company and the individual employee exceed their performance objectives to employee representation in the development of critical personnel policies (e.g., the disciplinary system).

c. Instituting an internal grievance appeal process to remove the last (assuming “a” and “b” are followed) appeal the union has.

Summary

Employees under the National Labor Relations Act have the right to organize into labor organizations and to seek representation for the purpose of collective bargaining with their employers. The NLRA and subsequent court and NLRB decisions define the processes for this representation. The NLRB is given wide authority to determine on a case- by-case basis an appropriate unit of employees—one of similarities and interests for collective bargaining purposes. In the public sector the question of appropriate is often moot since employees’ right to organize is specified by profession—teachers, police officers, fire fighters, and so on.

The initial step is usually taken by a group of employees or a union organizer. Unions generally have three methods by which they can be recognized to represent employees: voluntary recognition by an employer when a majority of the employees sign authorization cards; an NLRB directive; or, the most common, a secret-ballot representation election. The organizing drive conducted by a union wishing to represent a unit of employees is very important. Tactics used by unions to organize and by companies to resist unionization have become much more sophisticated—such as salting an employer. Management can, and usually does, try to convince the employees to vote against the union in an election, but must carefully follow “TIPS” and “FORE” during the campaign. The NLRB strives to hold a fair election—one in which all employees have a “free choice” without undue pressure by either the union or management. If a union receives a majority of those voting in the election, it is certified by the NLRB as the exclusive bargaining agent for the bargaining unit of employees for at least one year, and then begins to bargain a first contract with the employer.

Unions are structured into four levels; locals, nationals, internationals, intermediate, and federations. In the past most unions were either craft or industrial, however more recently the differences have become blurred as many national unions have organized workers outside of their traditional roots, and thus today many are mixed unions, and include not only workers of different crafts and unskilled industries but private and public sector members in some cases. Local union officers include president, vice president, secretary/treasurer, business manager, and stewards—for many members the union person they interact with most. Stewards, because they serve a dual commitment to both management and the union and handle most grievance issues, are highly valued.

CASE STUDIES Case Study 4-1 Salting

The Company is engaged in the business of removing or cleaning hazardous waste. Most of its employees fall into three categories; (1) field technicians who are unskilled laborers; (2) drivers and operators of trucks; and (3) field supervisors who go out into the field and are in charge of jobs. The driver and equipment operator positions require commercial driving licenses (CDL). All parties agree that the people who are called field supervisors are employees and not supervisors within the meaning of  Section 7  of the act.

The Union was engaged in organizing companies in the area handling hazardous materials. The Union sent a letter dated March 9 to the Company indicating (a) that it was commencing an organizing drive; (b) that the NLRA precluded the employer from restraining or coercing its employees; and (c) that it would be distributing literature to its employees at various projects. Subsequently, the Union began leafleting to the Company’s employees on their way into and out of the workplace.

On March 21, the Company placed a help-wanted ad, seeking to hire operators who had CDL licenses and H&T (hazardous material handling endorsements). The Union sent two members, Castillo and Rivera, to apply for a job. And even though neither had the required commercial driver’s license, they were allowed to fill out applications and were interviewed. They both were told that they could have jobs as field technicians, and arrangements were made for them to get a drug test. Neither informed the Company that they were members of a union or that they intended to organize employees on behalf of the Union. They were “covert” salts and were instructed to keep their union membership secret until the appropriate time. Castillo and Rivera were told by the Union that if they obtained jobs, the Union would make up the difference in the wage rate paid by the Employer and the wage rate that they had been getting from being employed as shop stewards at union employers. Also, the Union agreed to provide them with any benefits not provided by the Company. They started as field techs on April 16 or 17.

On the morning of April 13, the Union sent teams of union agents into the Company’s office to apply for work at the Company as “overt” salts. The overt salts went to the Company’s facility in pairs, wearing union clothing and carrying recording devices to record what was said during the application process. When the overt salts entered the facility, they asked the Company’s receptionist for employment applications and advised her that it was their intention to organize the Company. She responded that the Company was not interested in becoming a union shop, but informed the applicants that they could apply for one of the available driver positions but that, in order to apply for such positions, they would have to produce driver’s licenses with CDLs and HAZMAT endorsements. Although some of the applicants indicated to the Receptionist that they possessed those licenses, it is undisputed that, in fact, none of them did. When none of the individuals were able to produce the required licenses, she advised them that they could come back and fill out applications when they had obtained them. One of the applicants then inquired whether he could fill out an application for a field technician position. She told him that the Company did not have openings for field technicians at that time, but that he could complete an application and she would keep it on file. He did not, however, complete an application. None of the applicants returned to the Company after April 13, nor did they make any further attempt to apply for employment with the Company.

The Union filed an unfair labor practice charge against the Company for refusing to hire or consider for hiring the union members in violation of the NLRA.

In order to establish a refusal-to-hire violation the Union must establish the following elements: (1) that the Company was hiring, or had concrete plans to hire, at the time of the alleged unlawful conduct; (2) that the applicants had experience or training relevant to the announced or generally known requirements of the positions for hire, or in the alternative, that the employer has not adhered uniformly to such requirements, or that the requirements were themselves pretextual or were applied as a pretext for discrimination; and (3) that antiunion animus contributed to the decision not to hire the applicants. In order to establish a refusal- to-consider violation the Union has to show (1) that the Company excluded applicants from a hiring process; and (2) that antiunion animus contributed to the decision not to consider the applicants for employment.

The Company argued that none of these applicants had the qualifications necessary to be hired as drivers. Nor were these “overt salts” actually looking for employment. All of them had full-time jobs at the Union, as business agents, organizers, or dispatchers. When they were invited by the office person to submit applications for nondriver jobs, accompanied by their social security cards and driver licenses, they never followed up on this invitation and not one made any further attempt to apply for employment. Furthermore, the Company, having recently decided to hire around four laborers (including union salts Castillo and Rivera), did not immediately need any field technicians. Put simply, they were not qualified for the jobs advertised and they did not apply for jobs for which they were qualified, but which were not immediately available.

The Union argued that the Company’s decision not to hire or consider for hire the “overt salts” was clearly motivated by antiunion animus for when the two “covert salts” applied for jobs for which they were not qualified, the Company allowed them to complete the application process and they were, in fact, hired as field techs. In addition, the Receptionist’s statements that the Company did not want to be a union shop clearly showed the antiunion animus amid the ongoing organizing drive.

Source:  Adapted from Allstate Power Vac, Inc. and Laborers International Union of North America, Local 78, 354 NLRB No. 111 (2009).

Questions

1. Explain how the Company’s treatment of both the “covert” and “overt” salts applications for jobs compares to the recommended counter-salting steps for employers.

2. Would either the “covert” or the “overt” salts in this case satisfy the NLRB ruling that applicants for employment bust be genuinely interested in seeking employment before claiming protection under the NLRA?

3. Does the Company’s opposition to becoming a union shop indicate that there was antiunion animus in refusing to consider the “overt” salts for employment?

Case Study 4-2 Exclusive Representation

In 1981, the company laid off more than 100 employees because of an economic recession. The existing contract already provided that laid-off employees would accrue “continuous service” credit for two years and would retain continuous service credit for an additional five-year period. In addition, the union negotiated additional benefits for these laid-off employees. One of the benefits was a commitment by the company that these laid-off employees would be “offered future employment opportunities” with the company in the event positions opened up.

Eleven years later, in 1992, the company needed employees, and it notified the former employees and offered them interviews. Some were rehired. However, 16 former employees who were still union members were not rehired. They sought the help of their union in filing a grievance against the company, claiming that the company had violated the contract by not rehiring them. The union declined, saying that because these union members were no longer employees of the company, they were not part of the bargaining unit and the union had no duty to represent them. The 16 former employees argued that under the agreement negotiated by the union while they were employees, they had acquired certain protections and that it was now the union’s duty to enforce those protections. Because the former employees could not pursue the grievance without the union, the negotiated protections would be meaningless if the union failed to represent them. The 16 former employees sued the union.

Source: Adapted from Smith v. ACF Industries, 149 LRRM 2693 (1995).

Questions

1. If the court rules that the union has no duty to represent these former employees, they cannot pursue their grievance against the company. Discuss why this result is fair or unfair to all three parties: the company, the union, and the former employees.

2. When the union bargained for the laid-off employees, the employees were told they would have future employment opportunities with the company. Do you think it was unreasonable for these laid-off employees to expect the union’s help 11 years later? Why or why not?

3. If the company and the union had known that 11 years would pass before positions opened up at this plant, do you think they would have provided the “future employment opportunities” provision?

 You be the Arbitrator “Just Cause” for Termination

Article VII

Seniority

Section 7 . Seniority shall be lost for the following reasons:

b. if the employee is discharged for cause.

Article XVII

Grievance and Arbitration Procedure

Section 7 . Step 3.

4) The arbitrator shall not have the authority to amend or modify this agreement or establish new terms or conditions under this agreement. The arbitrator shall determine any question of arbitrability.

Article XXII

Discharge or Suspension

Section 7 . The following disciplinary policy is hereby established:

1. Step 1. A written notice describing the nature of the employee’s problem(s) will be given to the employee, an opportunity will be provided to correct these problems.

2. Step 2.A second written notice will be sent and a two (2) day suspension without pay will be imposed, affording the employee some time to reflect on the problem and on ways to correct them. …

3. Step 3.Termination—Management reserves the right to waive this policy, if, in their opinion, it is in the best interest of the company to do so. …

Facts

A truck driver was discharged for failing to make timely deliveries and not using the quickest, most direct route as previously instructed. The company warehouses and distributes wholesale floor covering products and operates from several locations. The driver was hired in November 2000 and during his relatively short, eight-month tenure with the company received a total of four other employee warning reports. According to the employer, the driver demonstrated a continuing pattern of failing to follow orders, company policies, and supervisory instructions involving the use of a global positioning system (GPS) mounted in his truck, completing daily driving logs, and utilizing toll roads for the best way to make deliveries in a timely fashion. On two occasions the employee simply failed to complete his deliveries, costing the company extra expense and a loss of customer satisfaction. The triggering event for his termination was his refusal to use the toll road to make a delivery even though he was offered an advance of the toll road fee. In response, the union claims that the employee’s failure to use toll road was justified because he was already owed $87.32 in post-toll reimbursements. One of the employee’s prior warning reports was grieved and settled in his favor, and he was disputing the remaining three at the time of his discharge. In this grievance he is challenging his discharge, seeking reinstatement with back pay, seniority, and benefits.

Issue

Does the collective bargaining agreement (CBA) require the employer to have “just cause” to fire an employee, even if the language is not in the CBA?

Position of Parties

The employer argues that this discharge is not subject to arbitration because the CBA does not contain a “for cause” requirement (see Article XVII, Grievance and Arbitration Procedure, and Article XXII, Discharge or Suspension, printed earlier). Therefore, there is no standard against which the arbitrator may test the employer’s actions.

In response, the union argues that the company position ignores the plain language of the agreement stating that seniority “shall be lost. … if the employee is discharged for cause.” According to the union, in a unionized work environment, the termination of seniority equates to the termination of employment (see Article VII, Seniority).

Questions

1. As arbitrator, what would be your award and opinion in this arbitration?

2. Identify the key, relevant section(s), phrases, or words of the collective bargaining agreement (CBA), and explain why they were critical in making your decision.

3. What actions might the employer and/or the union have taken to avoid this conflict?

Source: Adapted from Superior Products, 116 LA 1623 (2002).

Chapter 5 Negotiation Models, Strategies, and Tactics

UAW vice president Bob King, who directs the union’s Ford Department, shakes hands with Ford CEO Alan Mulally at the opening of contract bargaining.

Source: © Jim West/CORBIS.

Negotiations are about changing the status quo. Unless both parties can receive something more than what the status quo provides, there is nothing for them to negotiate.

Theodore W. Kheel (Noted American Negotiator and Mediator)

Chapter Outline

1. 5.1. Negotiating Sessions: “At the Table”

2. 5.2. Critical Elements in a Negotiation: Information, Time, Power

3. 5.3. Ethics in Negotiations

4. 5.4. Bargaining Strategies

5. 5.5. Distributive Bargaining

6. 5.6. Integrative Bargaining

7. 5.7. Interest-Based Bargaining

8. 5.8. Reaching Agreement

Labor News United Auto Workers and Ford, GM, and Chrysler Provide Possible New Direction for U.S. Labor Contracts

In July 2007, the United Auto Workers Union (UAW) started what many U.S. labor experts saw as the most difficult round of auto industry contract negotiations in 50 years. After all, Ford, GM, and Chrysler, the U.S. “Big Three” automobile manufacturers, had lost market share and billions of dollars in recent years. The UAW staged brief strikes against GM and Chrysler to demonstrate its determination to preserve jobs, health care, and pensions. By December 3, 2007, the UAW finalized historic new four-year contracts, all of them with the Big Three—in less than five months!

So how did the UAW save jobs, health care provisions and pension benefits while enabling the auto manufacturers to realize billions in cost reductions? By agreeing to radical new changes in their labor contracts:

1. Wage freeze. Current workers received a four-year wage freeze.

2. Lower wages for new workers. In a new “two-tier” wage scale, new workers will be hired at wage levels between $14 and $16 per hour compared to an average of $26 per hour for current workers.

3. Concessions. No more COLAs, one paid holiday, no overtime after eight hours, and education benefits (paid tuition).

4. Job Guarantees. The UAW gained guarantees to keep plants open that were selected for closure as well as ideally keeping thousands of other jobs that might have been lost if the Big Three cannot regain financial success.

The UAW in past years has been credited with many other contract firsts, including paid health care, pensions, paid holidays, and job security provisions. With the new 2007–2011 agreement, the UAW and Ford again provided a new direction for American labor with a four-year wage freeze and a new “two-tier” wage system that includes starting salaries of about half of current workers—in exchange for job security. The 2011–2014 CBA included a $6,000 signing bonus and $3,700 in profit-sharing, but kept the two tier pay system.

In 2011, UAW locals and members were becoming angry over the concessions made in 2007. As Ford returned to profitability, and GM and Chrysler rebounded after receiving federal bailouts—which the UAW supported—UAW sought to end the “two-tier” wage systems and was successful at the GM Lordstown, Ohio, plant, where the new Chevrolet Cruze is built and at Ford’s Michigan plant, where the new Ford Focus is built. Why did management agree to give up the two-tier?—Ford CEO Alan Mulally pointed out, “There are so many ways to create efficiencies without looking at wages!” Thus the future of “two-tier” wage rates for UAW/Ford, GM, and Chrysler appears uncertain.

Source: Adapted from Jere Downs, “New UAW Contracts May Have Wide Effect,” Louisville Courier Journal (December 16, 2007), pp. D1, 2; Joseph R. Szczesny, “UAW Anger at Concessions on the Rise,” Time (February 23, 2010); and Trademarkets (October 9, 2010). Available at www.Time.com. Accessed August 23, 2011.

Labor and management meet across a negotiating table because the National Labor Relations Act requires that the parties bargain in good faith. The NLRA also provides that neither party has to agree to any particular proposal as long as it continues to bargain in good faith. Thus, the act establishes the boundaries of the negotiation process but leaves the internal workings to the parties involved. No particular negotiation model, strategies, or tactics are required by law.

Over the years, the labor–management bargaining process has largely changed from an adversarial confrontation between the forces of “capital” and “worker” into a stylized ritual between the representatives of management and labor in which, more often than not, both parties come to the bargaining table with realistic expectations, and the understanding that their own interests are interdependent with the interests of the other party.

Whether or not that observation is correct, collective bargaining has certainly changed from mere confrontation to a process by which labor and management sincerely attempt to address conflicting interests. Respect for the process, however, does not change the fact that the collective bargaining process is adversarial, and it involves conflict resolution and compromise. The parties interact on the issues using whatever advantage they have to achieve their goals. The key to successful bargaining lies in flexibility, understanding the interests of both parties, and using the process.

In this chapter we discuss the major bargaining models of distributive and integrative bargaining and the types of strategies and tactics employed at the negotiation table. Although examined here in the field of labor relations, these models, strategies, and tactics are commonly used by negotiators in many business, professional, and personal bargaining situations.

Negotiating Sessions: “At the Table”

When two parties sit down at the bargaining table, the exact process they choose to follow depends on their past history together and their individual skills and negotiating styles. Although no two labor–management negotiations follow the exact same steps,  Figure 5-1  describes the bargaining process generally used during collective bargaining, followed by a brief explanation of these steps. The negotiation concepts listed in each step are discussed throughout the chapter. The chapter also presents the two major bargaining models and tactics that are commonly used “at the table” by negotiators. First, distributive bargaining, which is the traditional and primarily adversarial approach, is explained. Then a more collaborative approach, generally called integrative bargaining, is discussed.

Opening Session

In the opening session of most negotiations, time is devoted to establishing the details of the negotiation process. The parties begin with introductions of the negotiating team members and exchanging lists with the names and contact information of team members. Neither side may dictate

1. The Opening Statement

A. Describe the “Big Picture” of the negotiation situation. The past relationship between the parties, current issues to be presented during negotiations, as well as the major external factors and the concerns of both parties may be discussed.

B. Suggest Ground Rules that will facilitate the process (start with the 5 Ws: Who speaks for each party; Where will negotiations take place; When will sessions begin and for how long; What form of agreement is acceptable; How will formal proposals be made and agreed upon).

C. List the “Key Issues” that must be resolved to reach a settlement and ask for a list of the other party's key issues. These issues are often economic in nature and thus involve wages, benefits, or costs. However other noneconomic issues such as seniority, grievance handling, or subcontracting might also be a key issue in a particular negotiation.

2. The First Negotiation Session: Presenting the Proposals

A. Ask the other party to present its proposals first. Listen intently to determine its true, genuine interests on issues which underlie its opening positions on those issues.

B. Utilize “active listening” tactics as the other party presents its case; acknowledge what he or she is saying with reflective statements, and open-ended questions such as “Why …” to better understand the other party's interests.

C. Where possible, identify common interests which might easily be resolved.

3. Negotiate Minor Issues First

A. Identify the minor issues that should be easier to resolve and try to build momentum. Suggest logical “trade-offs” or packages of issues that provide some gains for both sides.

B. Include “throwaways” in your list of issues to build momentum and provide you leverage to make trade-off for issues of greater value.

C. Frequently mention that both sides need to satisfy some interests and realize mutual gains to reach an agreement. Ask the other party to brainstorm new options together.

4. Negotiate “Key Issues”

A. With “Key issues,” of economic value such as wages or health care, frame each proposal with persuasive arguments and use relative norms when appropriate.

B. When a distributive process is utilized, make the first offer to anchor the negotiation, or let the other party make the first offer to enable you to respond with an offer to create a favorable settlement range.

C. Once the settlement range for an issue is established, make small incremental concessions that lead to your desired settlement value.

D. Only make large concessions if matched by the other party. Try to never counter your own proposal.

5. Responding to Proposals

A. Always take time to evaluate a proposal, rejecting immediately may signify a lack of sincerity on your part.

B. When rejecting a proposal explain why it does not meet your interests.

C. If time is available ask to suspend the negotiation to research data or information which may support your interests or question the other party's interests, or clarify a fact in dispute.

D. Caucus often to re-think your interests, evaluate the other party's proposal, or simply “regroup” your team. Never allow team members to express conflicting views at the table.

E. Avoid possible impasse, by suggesting that issues which appear to defy resolution be placed on the “back burner” until the end of negotiations.

6. The Closing Stage

A. To facilitate the closing, in the Ground Rules provide that issues agreed to during negotiations be “signed-off, dated” and removed from the table for further discussion.

B. A written, signed, and dated agreement or contract is standard in collective bargaining negotiations. One party can offer to prepare the first draft of all the signed-off and agreed provisions, and the other party then proofreads the draft.

C. Expect many of the “Key Issues” to be settled at the end, in the last 10 percent of negotiations, that is the normal process.

D. When it appears a deal is close, expect the other party to try a “Nickel & Dime” tactic to close the deal. Be prepared to “walk away” rather than make a last minute major concession just to achieve “the over factor”—desire to get the process over with. After all issues are agreed upon, the union will offer it to its membership.

Figure 5-1

A Model for Negotiating Sessions

Source: Courtesy of Lou Manchise, former director of mediation services, Federal Mediation and Conciliation Service, “A Helpful Model for Negotiations,” unpublished manuscript (2008). Used by permission.

the membership of the other’s negotiating team, but rules may be established as to how many members are allowed on each side and as to their official roles, such as spokesperson, recording secretary, and doorkeeper, who makes sure only authorized persons attend the negotiations. Negotiating teams may be kept as small as possible to allow for productive discussion. Each side must have a designated leader who makes commitments for the respective parties. Traditionally, union negotiating teams can only agree to propose the contract to the membership for acceptance. Final approval generally depends on a secret-ballot vote of the members, depending on the rules of the union.

If the parties have negotiated previously, they often use the first session to discuss the “big picture” of the current situation, which may include critical issues such as deadlines, outside influences, and general economic conditions. A general discussion may take place on how they intend to proceed: using a traditional distributive bargaining process or a more collaborative process. If the parties, or people at the table, have not negotiated together before, this process and the discussion of ground rules may take some time as they jointly determine how to proceed.

A bargaining agenda might be set to establish the exchange of initial proposals and the order of discussion of bargaining items. If possible, the agenda includes how long to continue with one item if agreement is not made because a stalemate in the early stages of bargaining can unnecessarily sour the process. If feasible, the agenda provides that less controversial issues are discussed first so an atmosphere of progress and agreement is fostered.

Usually a decision is made on how to keep records of the negotiations. An accurate record keeps both parties honest during negotiations and facilitates drafting the final contract. A single outline of items discussed, proposals made on those items, and what was agreed to or where disagreement arose is often prepared by one party and initialed by the other. The site of the negotiations needs to have private spaces to allow for a caucus by either party. The caucus and adjournment rights of both parties are often decided in the ground rules or initial session. Misunderstanding as to the caucus rights can lead one or the other party to stage a needless walkout when a strategic retreat could have served as a positive catalyst to settlement. Finally, the role of a mediator, if they intend to use one in case of an impasse, may be included in the ground rules or initial session.

Ground Rules

Usually at the opening session, the parties set the rules of the collective bargaining process. If the parties have a long-standing relationship, establishing procedures can be very routine. But when the collective bargaining process is relatively new or when the parties have had poor labor relations, setting ground rules can be as difficult, and as important, as bargaining on the issues. The parties decide the  “5 Ws”  : who speaks for the parties; where the parties will meet; when, how often, and how long will they meet; how will formal proposals and responses be made; and what form of agreement will be acceptable. The number and length of bargaining sessions may indicate a party’s reluctance to bargain in good faith. These and other procedures are often agreed to in writing as  ground rules for negotiations. Exactly what is included in the ground rules varies greatly according to the desires of the negotiators and the bargaining history of the two parties.

5 Ws

The who, where, when; what form of agreement; and how will proposals be made as agreed to in the ground rules.

Ground rules

The general procedures and policies that each party agrees to adhere to during negotiations. These are usually agreed to in writing before the negotiations and may include such items as the time, date, and location for the negotiating session.

The following are examples of useful common ground rules:

1. All negotiation sessions will commence on the time, date, and location heretofore agreed on by the parties.

2. The chief negotiator for the company and the chief negotiator for the union shall be the chief spokespersons for the respective parties’ interests. However, others present may speak as required or be called on by the chief negotiators.

3. Insofar as practical and reasonable, the data introduced by either party at negotiations shall be made available to the other party.

4. If either the company or the union intends to add a new member to its respective bargaining committee, the party adding the new member will notify the other party.

5. Proposals and counterproposals will be made on typed copies as reasonable and will be signed and dated by the appropriate party. The parties shall simultaneously exchange initial noneconomic and economic proposals at the appropriate times.

6. Individual items agreed to by both parties shall be signed and dated, and removed from the table with a “tentative agreement.” Any attempt to reintroduce or discuss those items shall be viewed as a breach of good faith. However, the parties have agreed that all “tentative agreements” are subject to a total agreement being reached.

7. Management’s chief negotiator and the union’s chief negotiator shall have the authority to agree in substance on contract language and provisions. However, any agreement is preliminary and contingent on a final contract. All preliminary agreements made regarding individual contract provisions shall be initialed and dated by both chief negotiators.

8. If mediation is agreed to by both parties in the case of an impasse, the mediator shall be someone who is agreeable to both parties.

9. The current labor agreement will be extended on a day-to-day basis until a new one is reached, or until one party serves notice to the other party to end negotiations.

Even an oral commitment by both parties to extend the current contract until a new one is reached can be binding—according to a 2009 NLRB decision. 1

Recognizing Common Bargaining Tactics

The typical atmosphere of a collective bargaining session largely depends on the attitudes of the parties involved and the negotiating model they choose to use. As discussed later in this chapter, both attitude and negotiating model are greatly influenced by the parties’ prior relationship, the economic circumstances of the employer, the employer’s basic attitude toward unionization, and the leadership of the union.

Traditionally, the initial working sessions of collective bargaining are no more than monologues in which both parties present their list of demands and provide data and arguments to support their positions. The laundry list proposed by the parties purposely includes bargaining items that can and will be bargained away during the negotiations with varying degrees of reluctance. This  posturing  in the first sessions is very important. It allows a certain amount of face-saving to the party who comes to the bargaining table with the least amount of bargaining power. Posturing also provides members of the negotiating teams the opportunity to “let off steam” or “have their say” about issues that have caused raised emotions.

Posturing

The pattern established during the initial bargaining session in which each negotiating party demonstrates its willingness to negotiate, identifies its basic bargaining positions, and generally sets the tone of the negotiations.

The participants should anticipate several common bargaining tactics if traditional bargaining is used including:

Conflict

Negotiations by nature contain conflict, which can cause tempers to rise, name-calling, and anger. However, both sides are aware that their goals are interdependent. Neither side can achieve success at the table, or in future years, without a relationship with the other side.

Concealment

During negotiations, parties often conceal their real goals and objectives to enhance their opportunity for the best possible settlement. This is a characteristic of the distributive negotiation process and should be expected. Every negotiator must decide how open and honest to be in communicating needs and preferences. If a negotiator is completely open and honest, he or she might settle for less than if he or she conceals goals and fights harder for a better settlement. However, if a negotiator is completely deceptive about goals, the talks may never move in the direction of a settlement. Thus, negotiators must present and discuss their goals, but without revealing their exact goal or acceptable outcome, to move negotiations forward.

Packaging

It is difficult to achieve an agreement on all issues at one time. As many as 50 economic and noneconomic issues may be involved during labor negotiations. If all 50 issues are left on the table and discussed at the same time, the process would become unwieldy. Instead, a few items may be packaged together, agreed to, and removed from further discussion, allowing both sides to achieve their goal on one or more items and thus establish trust in the process, and decrease the number of unresolved issues. These packages of items, therefore, move negotiations toward completion.  Packaging may at least narrow the list of disputed items to the high-priority issues for each side. The ground rules may require each chief negotiator to “sign off” on a package—signing and dating a written counterproposal detailing the items agreed to—thereby removing them from further discussions.

Packaging

A negotiation tactic of putting a few items together and allowing both sides to achieve gains on one or more items to establish trust and decrease the number of unresolved issues.

Throwaway Items

Negotiators, in their list of initial demands, may include items of little or even no real value to their side, thus providing some items to trade in exchange for others of high priority to their side. Throwaways can be the basis of a successful bluff if the other side believes it has won a concession on an important item. The  throwaway items  may have some real value, but they simply are not of high priority in comparison with other issues. A throwaway item for one side may, in fact, be a high-priority item for the other side.

Throwaway items

A negotiating tactic in which a party introduces items of low priority to its side to trade for items of higher priority.

Caucusing

Much of the negotiating time is spent with each party meeting separately. After a proposal or counterproposal is received, a team usually asks for a caucus. In caucuses, team members can openly discuss the merits of the proposal and their willingness to accept it, or they can formulate a counterproposal. One common strategy is to not reveal at the table how the party feels about a proposal received from the other side. Even an obviously desirable proposal may be taken to a caucus, and when the team returns to the table it accepts the proposal without emotion. An expression of happiness over a proposal may lead the other side to feel remorse or believe they need not give on further items. Caucusing is also used for resolving disagreement among members of the same team and gathering additional information about unanticipated or costly proposals.

Flexibility

The successful negotiation process requires the exchange of many proposals and counterproposals. The parties should be prepared to be flexible. Every proposal received should be studied and responded to by acceptance or a counteroffer. The quick, immediate rejection of a proposal implies inflexibility and a response of “we will only accept our position.” This attitude may anger the other side and may, in fact, be bad-faith bargaining if one party consistently rejects offers without serious thought. Also, most proposals must be carefully evaluated before their merits can be accurately estimated.

The parties to a negotiation often need to break out into private sessions, or a caucus, to discuss the various options discussed at the table.

Source: © Blend Images/Alamy.

Compromise

The key to successful negotiations is compromise by both parties. If either side believes it will achieve its position on every goal, then most likely no settlement will be reached. Instead, both parties must realize that many of their goals are in direct conflict; what one side gains on an issue, the other side loses. If one side loses on too many issues, it may not sign the agreement, or, if forced to sign then, it certainly will be looking to “even the score” during the next round of negotiations.

Saving Face

It is important to recognize the need for both parties to save face. The face-saving process at the end of labor–management negotiations typically involves the union negotiator claiming victory while management remains silent. The parties recognize that the union must win ratification by the membership. If management boasted about the gains it made at the table (and both sides always make some gains), then the union negotiators might lose face and the members reject the deal, sending their negotiators back to the table for more management concessions. Getting a final deal—the ultimate goal—is also the most effective way of putting all disputes and face-saving issues in the past. 2  Face saving also means that a negotiator needs to reconcile the stand that he or she has taken during a negotiation or in an agreement with his or her past words and deeds. One cannot take a firm stand on an issue and then agree to something totally different without a reasonable explanation. The importance of face saving to the negotiation process cannot be underestimated. 3

Saving face

Allowing negotiators to present the end product of a negotiation in the best light, with neither party publicizing individual wins or losses to ensure ratification of an agreement as well as the ability to ensure more positive relationships in the future.

Tips from the Experts

What are three classic mistakes to be avoided at the negotiations table?

Union

1. Make certain that when an employer claims it is unable to meet your wage demands, you demand information on the financial condition of the company. Under the National Labor Relations Act, you are entitled to financial information if the employer claims a lack of funds, an inability to stay competitive, or the loss of a necessary profit margin.

2. Remember that if negotiations reach an impasse and such an impasse is not the result of an employer’s bad-faith negotiations, an employer may unilaterally implement its last offer. Such an action allows the employer to bypass the bargaining unit’s representatives and deal directly with employees, thereby undercutting your ability to represent your members.

3. Make certain that any issue brought up at the negotiating table is either completely resolved or explicitly reserved for future negotiations. A so-called zipper clause in many collective bargaining agreements precludes reopening negotiations on any mandatory or permissive bargaining subject that could have been brought up at the negotiations table.

Management

1. Unless you want to provide the union with all the company’s financial information, make certain you do not claim a financial inability to meet the union’s wage demands. The U.S. Supreme Court has ruled that if management rejects a union’s proposal on grounds of “inability to pay,” the employer’s financial condition then becomes relevant to the negotiations, and the employer must provide the union with financial statements, including profit and loss, assets, and liabilities. To avoid this problem, management can simply state, “We are not willing to agree” with the union’s wage demands. Such unwillingness may be based on a number of factors and does not require management to reveal financial information. 4

2. Make it clear at the beginning of the negotiations what authority you do or do not have to reach a binding agreement on behalf of the employer. If you need to check with higher authorities before making a commitment, make sure you have explained that to the union’s negotiators. Otherwise, springing the need to go back to management can be seen as a delaying tactic that may be deemed an unfair labor practice.

3. Take care in labeling a proposal as the “last, best” offer because if an impasse is reached and there is no bad-faith bargaining on the part of the employer, the employer may implement its last offer unilaterally. However, it is not permissible in such circumstances to implement a proposal that is in any way different from what was previously offered to and was rejected by the union.

Before negotiations begin, the parties separately decide what overall strategy should be employed in the negotiation. To do this the negotiators for each side should first identify and weigh the critical elements of any negotiation: information, time, and power. 5  These factors may or may not be directly discussed at the table, but often significantly influence the outcome.

Critical Elements in A Negotiation: Information, Time, Power

Information

The first critical element, information, has been called “the heart of negotiations.” Why? Information shapes individuals’ assessment of reality, their negotiation strategy, and their expectations of what can be achieved, and thus the outcome of a negotiation. Consider, for example, how information shapes the appraisal of the price of a new Ford Escape Hybrid SUV. The sticker price on one with the desired options is $36,000. A saleswoman contends the brand-new Escape Hybrids are hot-selling models, and a newspaper article, noting the high price of gas, says some people are paying over the sticker price. With this information, one would expect to pay more than $36,000 for a new Escape Hybrid. However, a week later, the dealer advertises a “special weekend” price on all Escape Hybrids of $1,500 off the sticker price. A neighbor buys an Escape Hybrid on a “great deal” through a friend and paid $2,000 below sticker. A Consumer Reports article advises buyers to go online to find the best price for new Escape Hybrids. An Internet search turns up an offer at $3,000 below sticker a mere 89 miles away. Now the expectation is to buy a new Escape Hybrid for at least $3,000 below sticker price. The appraisal of a “good deal” changed as more information was received.

BATNA

To a negotiator, the most important single piece of information in a negotiation is one’s  BATNA : Best Alternative To a Negotiated Agreement, or a party’s alternative course of action if they walk away. 6  Before entering into any negotiation, a party must realistically assess the risk and reward of reaching, or not reaching, agreement. Key goals of what one wants or expects from the negotiations should be identified. If those key goals are not being met, then a buyer can walk away from a salesperson, a manager can search for a new vendor, a lawyer can go to court instead of settling a case, or an investor can seek other uses of his funds. In collective bargaining, a BATNA may be a union’s ability to stage a successful strike or management’s ability to hire replacement workers. It is also, however, very important that negotiators evaluate their  WATNA  : Worst Alternative To a Negotiated Agreement. That is, if negotiations falter, what is the worst possible outcome? Too often people are optimistic and can easily think about their BATNA but fail to consider their WATNA. In a failed labor negotiation, the WATNA may be, for example, the permanent closure of a facility, loss of all management and union jobs, and economic crisis for the local community.

BATNA

A negotiator’s best alternative course of action if no settlement is reached.

WATNA

A realistic assessment of the worst alternative to not reaching an agreement that affects what a party is willing to agree to in order not to reach an impasse.

Relative BATNA

One’s BATNA does not have to be objectively “better” than the other party’s BATNA to give one negotiating power. If a negotiator believes the range of possible negotiated outcomes of a particular transaction is inferior to the alternative of not reaching agreement, the negotiator may decide to quit the negotiation. This can cause the opposing party to question the range or advisability of his or her BATNA. Like a self-fulfilling prophecy, if a negotiator believes he or she has power within the negotiation because of available alternatives, then what the negotiator sees and hears in the negotiation tends to confirm that belief. 7  If a party is convinced that its BATNA is better than its opponent’s, and that conviction is conveyed to the opponent, the party has increased its leverage in the negotiation. 8

Time

Time plays a critical role in many negotiation situations, and Pareto’s law, or the “80/20 rule,” often applies. Pareto’s law simply states that 80 percent of what is accomplished occurs as a result of 20 percent of the effort while the remaining 20 percent of what is accomplished takes 80 percent of the effort. In negotiation this often results in 80 percent of the deal being agreed to in the last 20 percent of the time spent in bargaining. Timing causes the chronological course of the negotiations and may force the negotiators to make the difficult decisions at the end because they are about to face the consequences of not reaching an agreement.

Negotiators who effectively use deadlines or careful timing can cause the last 20 percent of the time used to produce better results. For example, in the historic 1999 NBA negotiations between the owners and the player’s union, the team owners had locked out the players in 1998, and several months of negotiations produced no progress. NBA commissioner David Stern set a deadline of January 7, 1999, after which he would be forced to cancel the season to provide the notice required by the league’s contracts. On January 6, within only a few hours of the deadline, both sides reached agreement and season play resumed. 9

In most negotiations both sides have some deadline or general preference as to when they would like or need to reach a settlement. Negotiators can use deadlines to their advantage. 10  Unless it is an initial union contract, in labor negotiations the deadline is almost always the date of the expiring contract. But even in those cases, the parties may be prepared to bargain past the point of the expired contract. Time and deadlines can favor either party and significantly alter the outcome of a negotiation.

Power

The third critical element is power. Patrick J. Cleary, former chair of the National Mediation Board, noted, “More than anything else—yes, even more than money—the negotiation process is about power, ego, leverage, and saving face.” 11  The most essential source of bargaining power in any negotiation is the ability to walk away. A BATNA can determine who has more bargaining power in a negotiation. For example, in a 2002 negotiation of a collective bargaining agreement between the United Parcel Service (UPS) and the Teamsters, the Teamsters, by appointing Ken Hall as the lead negotiator, signaled that their best alternative to an unfavorable labor agreement was a strike. Why? In the prior contract talks, Hall helped lead the Teamsters to victory against UPS by staging a successful 16-day strike. The strike lasted three weeks and caused UPS to lose $750 million in revenue, and many longtime customers switched to its competitors Federal Express and DHL. Thus, in 2002, by appointing Ken as the renegotiation time neared, UPS experienced a decline in business as customers, fearing another strike, began using UPS’s competitors. UPS could not afford another strike and needed a settlement quickly, giving the Teamsters significant leverage. The Teamsters were seeking major improvements, such as a 25 percent increase in wages for drivers and 50 percent for part-time workers, no reduction in health care or retirement benefits, converting 10,000 part-time jobs to full-time jobs, and a six-year agreement to provide job security. In a weak economic climate and while many employers were reducing health care and pension benefits in new contracts, the Teamsters were able to gain a historic contract because of its bargaining power. 12

In contract negotiations management and labor need to understand the  “power balance”  that exists when they sit down to negotiate. For example, UAW president Ron Gettlefinger in 2007 was well aware of the fact that the U.S. Big Three automakers, GM, Ford, and Chrysler, had lost billions of dollars in recent years as well as invaluable market share. The union threatened strikes to show solidarity, but in reality realized the balance of power was not in their favor because the automakers all had excess plant capacity, months of inventory on dealer lots, and significant losses in recent years that seriously threatened their survival. The result was new agreements with the automakers that included two-tier wage rates that paid new workers at a rate of about half of the current workers. Only about ten years earlier, the power balance was reversed as the Big Three were experiencing record profits and sales and thus didn’t want any loss of production because of strikes. At that time the UAW was able to negotiate historic job security provisions. These examples point out a critical aspect of power: It is situational, and the balance in many cases changes over time. Thus, negotiators who believe they clearly hold the power advantage year must also consider they may be on the other side in future years and thus not exploit their favorable balance. In addition, they must consider the value of maintaining a positive long-term relationship.

Power balance

External factors that affect the relative strength of the parties and the outcome of the negotiations.

Ethics In Negotiations

Ethics is the study of morality—the worth of moral judgments and principles of conduct that influence behaviors. A person’s ethical belief system provides a basis for the values they develop. Values reflect a person’s belief about “ends” to be achieved and about the “means” for achieving desired ends. 13  That is, they determine what one wants to accomplish and they determine what means one will be willing to use to reach that end. 14  In addition, adherence to particular values establishes behavioral rules. Behavioral rules are the accepted customs, standards, or models one expects of oneself in the conduct of one’s life and what we expect of others with whom we interact. Thus, in a negotiation situation, a person’s ethics, values, and behavior rules are important because they influence how each party views the other, how they evaluate the negotiation, and how they act during the negotiation.

In Western Civilization, three ethical theories have been used to describe alternate views of human nature, and have withstood the test of time. One ethical theory was developed by Aristotle (384–322 b.c.), a Greek philosopher, who believed that the inherent nature of human beings was “good.” 15  And that no matter what the action, a human being’s ultimate nature was to try to realize a truly good end. And, as it is inconsistent with “goodness” to use a “bad” means to achieve a good end, both the means used and the ends achieved must be “good.” Aristotle promoted a fairness or justice approach to ethics, ethics of purpose. In labor negotiations the employer wants a contract it could afford and the employees want a contract that maximizes wages and benefits. Employees realize that if their employment contract is not affordable, the employer will go out of business and the employees will be unemployed. Employers realize as well that an unfair agreement will not foster the type of workplace that is good for business. The means the parties used to reach a fair and affordable contract is collective bargaining. If the parties conduct their bargaining under acceptable behavioral rules then, arguably, the means are good, even if the tactics that might be used at the table include concealment or posturing.

A second ethical theory was developed by Immanuel Kant (1724–1804), a German philosopher, who believed that each person could, by reasoning, recognize that one should treat each person as he or she wished to be treated. Therefore, human beings would devise rational rules of conduct by which to live. Any other approach would be inconsistent and irrational. Kant supported the classic rule of “do unto others as you would have them do unto you,” ethics of principle. However, the rational thought process is complex. Two people may evaluate the same information and reach totally opposite conclusions because each receives and judges the information by using his own unique knowledge and experiences. Kant’s theory relies upon a collective rationalization that establishes moral rules. Under Kant’s theory, a negotiator who has manipulated information at the bargaining table has to ask himself or herself whether he/she would think the other side unethical if he or she withheld information at the bargaining table.

A third theory was developed by John Stuart Mills (1806–1873), an English philosopher and political economist, who believed that one could only judge the moral value of an action by its result. If an action benefits more people than it harms, then it is a moral action. Mill’s utilitarianism suggested that ethical actions are those that provide the greatest balance of good over evil. Mill supported the theory that the “end justifies the means,” ethics of consequence. Under Mill’s theory if the employer and the employees reach agreement at the table, and both sides are satisfied by the results, then the tactics used at table were ethical. These three ethical theories can be summarized as follows:

Aristotle	Ethics of purpose	People are inherently good
		Will strive to reach a good end
		Will use good means to do so
Kant	Ethics of principle	People are inherently rational
		Will see the right way to do things
		Will pursue rational means
Mills	Ethics of consequence	People will determine outcome of an action
		Will do that which does the most good
		Will use means necessary to reach good end

With business ethics much in the news today, the topic of ethical tactics in negotiations has become a complex topic. As noted earlier, even philosophers disagree about the correct compass to use to measure our actions—can we reach good ends if the means are questionable? Do unto others, as we would have them do unto us? Or do the ends justify the means? Each of those measures requires subjective analysis, and people often disagree about what is good, right, or harmful. But even if parties know what’s right, they may be motivated by self-interest to do otherwise. Self-interest, defined as pursuing an opportunity for private gain or avoiding personal loss or hardship, is a powerful motivator. 16  The essence of much bargaining involves persuasion—convincing the other side of what you will or will not agree to in order to reach an agreement. Since concealing your bottom line while still moving the negotiations forward may result in a better outcome for you, you have an incentive, or at least may be tempted, to use various misleading tactics. There is nothing unfair about such tactics if both of the parties to the negotiations understand that such tactics are a part of the process.

Often the ethical dilemmas in labor negotiations involve one or more of the following lapses in truth telling: (1) deception, (2) misrepresentation of one’s position, (3) bluffing, and (4) falsification. 17

Deception.  In negotiations there are plenty of opportunities to deceive one another about the matters under negotiation. There are, however, disincentives to deceiving the other party to negotiations that also spring from self-interest. Opportunities for deception in negotiations about the matters under negotiation are greater when the information disparity between the parties is great. There is always some difference in the amount or type of information each party has when they begin a negotiation. If that difference is great, then unless the more knowledgeable party volunteers information, the other party might not know enough to ask the right questions. So through passive concealment, the more knowledgeable party can be deceptive. There is more opportunity for deception when the truth of the facts presented in the negotiations is difficult to verify by any objective standard. Other instances when deception is likely are when a party has insufficient resources to make the kind of inquiry necessary to verify information, when interaction is a one-shot deal so the time available to confirm information is limited, and when the intent to deceive is hard to establish.

Misrepresenting one’s position. Another opportunity for unethical tactics in negotiations concerns concealing one’s settlement preferences, that is, exactly what you will settle for in a given negotiation. There is a fundamental clash between moral theory and negotiations practice embodied in the settlement-issue deception. 18  While lying about one’s bottom line is arguably unethical in many situations, it is a widely condoned negotiations strategy and considered “shrewd” when successful.

Bluffing . There is a significant opportunity for unethical behavior in negotiations when bluffing about future actions, that is, false representations embodied in threats and promises. Threats are often a part of traditional pressure bargaining, ranging from a threat to leave the bargaining table to threats on closing a business and laying off workers. Likewise, promises are often made during a

Table 5-1

Ethical and Unethical Bargaining Tactics

Appropriate Tactics	Marginal	Inappropriate Tactics
Gain information about opponent by asking associates and contacts	Make an unrealistically high or low first offer	Misrepresent factual information to support one’s own position
Make an unrealistically high opening demand	Lead opponent to believe you are the only game in town, when you are not	Falsely threaten your opponent
Hide your real bottom line		Promise good things with no ability to deliver
Give false impression you aren’t in a hurry to pressure your opponent		Bypass your opponent’s negotiator to undermine opponent’s confidence in him
		Gaining confidential information from your opponent

Source: Adapted from Roy J. Lewicki and Robert J. Robinson, “Ethical and Unethical Bargaining Tactics, An Empirical Study,” in Carrie Menkel-Meadow and Michael Wheeler, eds., What’s Fair, Ethics for Negotiators (San Francisco, CA: John Wiley & Sons, Inc., 2004), pp. 221-45.

negotiation to reach agreement. Deceptive threats and promises differ somewhat from those discussed earlier of either not offering information to the other party or concealing one’s bottom line, because they are acts of commission. That is, a party affirmatively makes threats or promises that he or she does not intend to act upon in order to get the other party to concede something in the negotiations.

Falsification . Negotiation involves the exchange of information. False information leads to bad deals and it is bad for business. Unethical negotiating tactics may induce someone to reach an agreement to which he or she cannot be truly committed. Reluctant parties make undependable partners. Ethical negotiation, like good business, furthers and strengthens the relationships of the parties, giving value to all of the participants. 19

Therefore, which common tactics of negotiation are generally considered appropriate and which inappropriate? The answer might be found in the results of two surveys in which M.B.A. students were asked to rate tactics used in a variety of negotiation settings and with differing levels of dishonesty, on perceived ethical appropriateness, and the likelihood they might use the tactic. 20  In both studies, the students generally agreed on the lists shown in  Table 5-1 . 21

Bargaining Strategies

Collective bargaining generally involves one of two strategic approaches: distributive or integrative, both of which are discussed in this chapter. When considering which approach might be best for a given collective bargaining situation, and since none is the best for all situations, a negotiator should first review the issues just presented: information, timing, and power. Other significant factors to be considered include the specific issues to be negotiated, the people involved, and the general context of the negotiations. Of these, the specific issues are probably the most important.

If only one issue is likely to dominate the negotiation, such as wage increase, then distributive bargaining is more likely to be used because it is a “zero-sum” process. If there are multiple issues and a positive bargaining history between the parties, however, a more collaborative approach, such as integrative (sometimes called “win-win”), might be more appropriate. In actuality, most real-world labor negotiations have elements of both models but rely heavily on one or the other. The parties involved and their relationships are also key factors to be considered. If they have had an adversarial relationship in past negotiations and used distributive bargaining in the past, then it is highly likely they will use that approach again. If, however, the parties have no past relationship, or have a relationship that is generally open and honest, and multiple issues are involved, the integrative approach may be used and might help them negotiate a mutually beneficial settlement. 22  Finally, the general context of the negotiations may determine which model is used. In management–labor relations, for example, unless the two parties make a significant commitment to changing the way things have always been done, using other than the distributive model would be rare.

Distributive Bargaining

The negotiation model known today as distributive bargaining was first identified by R. E. Walton and R. B. McKersie in their seminal work on negotiation theory, A Behavioral Theory of Labour Negotiations (1965). 23  In their work they defined the differences between distributive bargaining and integrative bargaining (discussed in the next section) in the field of labor–management relations. Today the terms distributive and integrative are commonly used in all discussions of negotiation theories and practices.  Distributive bargaining  is a negotiation method in which two parties strive to divide a fixed pool of resources, such as money, each trying to maximize its share of the distribution. It is a “fixed-sum” game, and often the limited resource is termed a “fixed pie.” It is also called a “zero-sum” process because the other party loses the amount gained by one party. For example, if a union realizes a $1,000 gain, then management realizes a $1,000 loss, and the sum of the two is zero. The most easily identified distributive examples for many people are the sale or purchase of a big-ticket item such as a house or car. 24  In such a purchase situation, the major factor is price, and funds are “distributed” between the two parties, and what one gains, the other loses.

Distributive bargaining

A negotiation method described as a “win-lose” situation, in which resources are viewed as fixed and limited, and each side wants to maximize its share.

Negotiators need to be prepared to use distributive bargaining tactics successfully and be prepared to respond to them if the other side uses them because, for many people, distributive bargaining is negotiation. When hearing the word negotiation, the classic car-buying situation comes to mind: a single-deal negotiation in which only one issue is key—price, and both sides view it as a zero-sum game. Or collective bargaining comes to mind: a union seeking to share limited resources, such as the company’s monetary assets, which can be used for a variety of purposes: new equipment or machinery, dividend payments, higher wages, and so on. Or a union hoping to fill available unfilled positions with new union members, so the process of deciding who is selected to be promoted or transferred can be the subject of distributive bargaining. Other noneconomic issues, such as the terms of seniority, employee grievance procedures, and plant rules, might be bargained in a distributive manner. Both labor and management often view any increase from the current contract as something to be gained at the negotiating table and as a loss to the other party. In distributive bargaining the fact that an issue is framed as a distribution by one party may cause the other to respond in a distributive manner.

Because many negotiators view any situation as distributive and therefore always use distributive strategies and tactics, one must be prepared to do likewise. And in labor–management collective bargaining, if the negotiators for one side choose to use a distributive bargaining process for each issue, it will be very difficult for those on the other side to not use a distributive process also.

Distributive bargaining is also referred to in general as “win-lose” bargaining because whatever one side gains is made at the expense of the other party. Thus, what is “won” by one is “lost” by the other. It is also referred to as “hard bargaining” because it is usually a highly competitive process designed to reach a formal written agreement, such as a labor agreement. The objective of the parties involved is to maximize their share of the fixed resource. Thus, each party may use a variety of tactics, including making threats, concealing their true objectives, misrepresenting information—or even lying, and using leverage or power if they perceive it is balanced in their favor. A common example in labor relations would be when management stages a lockout or a union threatens a strike when it perceives management could not afford the loss of production.

In general, the distributive bargaining model is identified by three components: (1) the parties involved largely view each other as adversaries, not necessarily away from the table, but still one party views the other as an opponent in the collective bargaining process at the table; (2) the objective of both parties is to maximize their self-interest or grab a larger “share of the pie”; and (3) they are mostly concerned about the current negotiation and interact with each other with a minimum concern for their past relationship and their future relationship. In collective bargaining, the reality is that both parties are well aware their future relationship is one of interdependence. 25  Thus, it is important to recognize that when they use the distributive model and bargain strictly as adversaries, they may suffer later when one or the other party takes the opportunity to “even the score” by filing numerous or frivolous grievances, subcontracting out work, or coming to the next round of contract talks with unrealistic demands.

When only one issue is involved, such as wages, the distributive bargaining process can best be explained by five key elements:

1. Target point . The most desired outcome or objective a negotiator sets for an issue, the target point, is the point at which the negotiator would prefer to end the negotiation, and would accept an offer.

2. Resistance point.  The resistance point is a maximum or minimum beyond which the negotiator will not accept a proposal. This is the negotiator’s bottom line (or reservation price).

3. Initial offer . This is the first number or offer the negotiator presents as a written formal proposal, which is accepted as reasonable starting point by the other side.

4. Settlement range . The difference between the resistance points of labor and management is the range in which actual bargaining occurs because anything outside the range will be quickly rejected by one party. This  settlement range  is also known as the zone of possible agreement, or ZOPA. In reality any point within the ZOPA may become the settlement value because all the points meet both the resistance points, for example, above a minimum price set by a seller, and below the maximum price set by a buyer.

Settlement range

In the negotiation of a specific issue, this is the difference between the resistance points of labor and management, also known as the zone of possible agreement, because anything outside of the range would be clearly unacceptable to one side or the other.

5. Settlement point . The heart of negotiations is the process of reaching agreement on one point within the settlement range: the settlement point. The objective of each party is to achieve a settlement point as close as possible to its target point. 26

Three key starting values

When negotiating an issue of economic or numerical value, one very useful negotiating tactic is for the negotiator to decide three key values, or numbers, before starting the bargaining, to guide their actions; (1) target point, or the most desired outcome, or simply where you would like to end (settlement point); (2) resistance point, or bottom line—the absolute maximum or minimum value you will accept, and beyond which you will walkaway; (3) initial offer, or opening offer, which when “put on the table” with justification is viewed by the other side as the true first number—not a “lowball or highball” offer, and therefore sets one end of the settlement range. For example, in a wage negotiation the union negotiating team decided that it could not sell any wage cut to their members, and thus a wage increase of 0 was their bottom line. At the same time they decided an increase of 2 percent was the highest they could reasonably expect to achieve and therefore it became their desired outcome. The union chose 4.5 percent as their opening offer because it was the highest wage increase they could find a similar union had negotiated, and thus could be defended. Thus the union’s three key values, decided before negotiations began, were 0, 2, 4.5.

Figure 5-2  illustrates an example of the distributive bargaining process. First, both sides develop and keep confidential their target and resistance points. Labor has surveyed its members, reviewed similar contracts recently negotiated, and estimated the company’s financial situation. Within a generally favorable economic climate (which may allow higher wage increases), the labor negotiators set 4.5 percent as their wage rate target point but are willing to consider any offer above 3 percent, the resistance point, if the total package contains other economic benefits. They honestly believe that the members would vote against any contract with less than a 3 percent increase because inflation since the last negotiation has averaged 4 percent, and recent contracts in the industry have included raises between 3 and 5 percent. Management negotiators set their target point at 3 percent, the lowest increase negotiated by any of their competitors. The company president has authorized negotiators to

Figure 5-2

Distributive Bargaining Negotiation Model: First-Year Base Wage Increase (percentage)

accept an offer of up to 5 percent, the resistance point, if the total economic package is within a certain dollar amount.

Next, both sides choose their initial offers. Management decides that a proposed wage giveback (decrease in base wage) might be considered bad-faith bargaining because the company is in a reasonably good financial condition, so it initially offers a 0 percent increase, the lowest possible given the circumstances. Labor knows that no similar union has received more than 6 percent and therefore feels that 9.5 percent (just under double digits) is as high an initial offer as can be made within the context of good-faith bargaining. Both sides realize that their initial offers must be different from their target point to allow room for negotiation “give-and-take” while also staying within what the other side would consider a reasonable and good-faith offer. At the same time, both sides realize that the other side’s initial offer has left them room to negotiate and is not their last, best, or final offer.

Negotiations between the two sides now center on the 0 to 9.5 percent range. Each side begins trying to convince the other to move from its initial offer. Neither side knows the target or resistance point of the other side. Both sides will, however, through bargaining table discussion, begin to estimate the target and resistance points of the other side to determine if a settlement range exists and therefore a settlement point can be found. At the same time, each side strives to convince the other of the validity of its own position. By presenting factual information such as company records, copies of recent contracts, and industry data—as well as persuasive information such as employee survey data—negotiators hope to influence the perceptions of the other party. Management may try to convince labor that to remain competitive and avoid layoffs, the company cannot afford an expensive settlement and is willing to take a strike if necessary.

Labor may try to convince management of the members’ determination to negotiate a high increase and their willingness to put on a successful strike. Eventually, both sides believe that they know, indirectly or directly, the other side’s resistance point. For example, management might state, “We will seriously consider an offer under 5 percent if the total package is right,” or labor might indicate, “Our members know that no other local has settled for less than 3 percent.” Now the negotiations center on the settlement range; both sides realize there are many possible settlement points within the range.

Now the “hard” bargaining begins. Within the 2 percent settlement range, each side carefully proposes a settlement point that, especially when wages are considered, may include other economic items in a package. And, most important, each negotiator is careful to propose only a settlement that he or she is prepared to accept. Within this range any offer might be accepted if both sides have a settlement point. Once the settlement point has been proposed and accepted, it is too late to “hold out for a little more.”

The settlement point is finally reached when one side achieves its target point or when both are willing to accept something less than their target points but within the settlement range. Factors such as the arguments of the other side, the total package, fatigue, or belief that “this is the best we can do” may influence negotiators to accept a settlement different from their target point.

Opening Offers: Anchors

The opening offers on an issue effectively set the outer limits of the bargaining. Why? In contract negotiations, obviously no union will accept less than management’s opening offer, and no management negotiator will agree to more than the union’s opening offer. Just as in a buyer–seller situation, no buyer will pay more than the asking price, and no seller will accept less than the buyer’s lowest offer. Therefore, many experienced negotiators often prefer to make the opening offer and then try to “anchor” the discussion around their offer. Still other experienced negotiators prefer to have the other party make the first opening offer. Once they have the other side’s opening offer, they can adjust their own opening offer to keep their desired outcome somewhere in the middle of the two opening offers. Negotiation researchers have shown that people irrationally fixate on the first number put on the table in a negotiation, and thus the offer becomes an  anchor  for the following negotiations, regardless of how arbitrary it may be. In fact, even when people know the anchor has little or no relevance, it still influences their decision making.

Anchor

An opening offer, often a number, and not necessarily a realistic number, that can influence the parties’ assessment of the zone of possible agreement in the negotiation.

The curious phenomenon of anchoring is illustrated in  Figure 5-3 , “The Power of Random Numbers.” Experienced negotiators know that the first offer on the table, especially in situations

With the spin of the wheel a number is selected purely at random. Source: Photos.com/Jupiterimages.

In an experiment on the effects of anchoring, Daniel Kahneman and Amos Tversky spun a wheel marked with random integers ranging from 0 to 100. Participants were then asked whether they thought that the percentage of UN member countries that were from Africa was greater than or less than the number just spun on the wheel. Participants were then asked for their best estimate of the proportion of UN member countries that were from Africa.

For one group of the subjects, the wheel stopped at 10. The vast number of these subjects said that the proportion of the UN member countries that were from Africa was more than 10 percent; on average, they guessed that the actual percentage was 25 percent.

For another group of the subjects, the wheel stopped at 65. Almost all of these participants said that the proportion of the UN member countries that were from Africa was less than 65 percent. In contrast to the first group, this group's average guess was that 45 percent of UN member countries were from Africa.

The only difference between the two experimental conditions was the number on the wheel, yet the groups’ best estimates differed by 20 percentage points! The purely random number the subjects were given by the wheel dramatically—and irrationally—anchored their assessments.

Figure 5-3

The Power of Random Numbers.

Source: Adapted from Daniel Kahneman and Amos Tversky, Negotiation 7, no. 9 (2004), p. 10.

of great uncertainty, can substantially influence the other party’s perception of the ZOPA, and thus the outcome of the negotiation. Remember that in fact there are two ZOPAs because each side estimates the ZOPA based on its own resistance point, and the resistance point each party guesses has been set by the other party. Thus, if an opening offer causes the other party to change its perceived ZOPA, then it has anchored the bargaining in a most effective manner. Negotiators often make opening offers, with one of three types of anchors: 27

1. Facts : Statement of what is presented to be a fact: Example: “Our offer is based on this list of other industry contracts settled in this region; the lowest wage increase in the past year was 3.5 percent.”

2. Extreme offer : Example: “We believe our officers are special public servants who put their lives on the line every day and thus deserve a 10 percent wage increase this year.”

3. Precedent : Example: “In the past 30 years, management has always, every time, agreed to retroactivity as a ground rule; we expect you to honor this practice.”

Once the opening offers are made, the real haggling process, often called bracketing, occurs.  Bracketing  is the process of moving toward a middle point between the opening offers (or brackets), which is the logical bargaining process. 28  Consider, for example, the negotiation described in  Figure 5-4 , “Grievance Settlement.” Management and union representatives both want to negotiate the settlement of an employee’s grievance involving discharge and reinstatement, and they have verbally agreed to a onetime payment; the amount, however, is the issue to be negotiated. The union made an opening offer of $12,500, and management responded with an opening offer of $7,500. The two sides then begin bargaining in the bracket range between the opening offers ($7,500 and $12,500). Thus, in general, a negotiator may “bracket” its initial offer, or initial counter, which is equal distance away from their desired objective as the offer made by the other party. So if the other person makes the first offer, a good response strategy is to bracket the negotiation and possibly end up splitting the difference, as is often the case, and therefore getting your desired objective. Some negotiators, when they feel bracketing might work, therefore, want the other party to make the first offer so they can bracket the negotiation. Realtors when counseling clients commonly apply bracketing.

Bracketing

The process of moving toward a middle point between the opening offers (or brackets), which is the logical bargaining process.

For example, a house is listed for $370,000 and potential buyers ask their agent, “What offer should we make?” They already told the agent they don’t want to go over $350,000 on any house. The agent responds, “Offer them $330,000, and let’s hope they counter with $360,000 and then you can counter with $350,000.”

Desired Outcome Strategy

In the  Figure 5-4  example, if management’s desired outcome or target point is to settle for no more than $9,000, then instead of an initial offer of $7,500, they should have made a more extreme opening offer of $5,500, creating a midpoint of $9,000. Why? By keeping their desired value, $9,000, in the middle of the two offers that are on the table, it is far

Figure 5-4

Grievance Settlement Negotiation

more likely to become the settlement point, or very close to it! To best utilize the desired outcome strategy management will continue to make counter offers that keep $9,000 exactly in the middle. In collective bargaining, the key “number” in negotiations is often the percentage wage increase. Both union and management negotiators often carefully choose an opening offer that will create a bracket that contains what they believe is a middle range that includes their target point or most desired outcome. For example, if management’s desired outcome is a 3 percent wage increase, and in negotiations the union’s opening offer is a 6 percent increase, then management might make an opening offer of 0 percent, thus creating a midpoint of 3 percent. However, if the union had opened with an 8 percent offer, management might have responded with a concessionary opening offer of 2 percent to create the midpoint of 3 percent. Then, whatever counter offer the union makes, management will counter with a number that keeps 3 percent as the midpoint of the range of the offers on the table.

Both sides have also decided their  resistance point ; the union will not accept less than $8,000—which is the minimum they have decided and if offered any lower amount they will take the case to the next step, arbitration. Management decided $11,000 is their resistance point, or absolute limit to resolve the grievance, or they will ask for arbitration. Obviously, in most negotiations, both sides do not reveal their resistance points. The distance between the two therefore becomes the ZOPA because any agreed-to final price will be between the two points because they are the limits each party has determined.

Resistance point

The maximum or minimum beyond which a negotiator will not accept a proposal—a bottom line.

The final, negotiated settlement point (X) usually is a point approximately in the middle of the two opening offers (if both sides accept the other’s opening offer as reasonable) because although the opening offers are known, the resistance points have not been revealed. In this example, the midpoint is $10,000. If the final point is larger than the midpoint, say $11,000, then the union may perceive a “negotiated gain” of $3,500, and management a “negotiated gain” of only $1,500. Why? The union has haggled for $3,500 more than the management’s opening offer, but management only realized a $1,500 drop from the union’s opening offer. Neither wants to realize a smaller negotiated gain than the other side, and thus both sides often try to move to the midpoint.

A critical mistake some novice negotiators make is to fail to make an opening offer that does not place their desired outcome near the midpoint, for fear of offending the other party. Then if the other party makes concessions and demands roughly equal reciprocal concessions, it becomes very difficult to achieve. The best strategy for an opening offer may be to allow for adequate negotiating room between the two initial positions by setting an opening offer, which both anchors a minimum position and provides an acceptable midpoint. When making such an offer, however, a negotiator must prepare a supportive argument to give the offer creditability, or else it may be ignored by the other side and thus not function as an anchor. A strong defense of an initial offer can achieve two objectives: (1) it convinces the other party that the offer has merit, and (2) it begins to call into question the credibility of the other party’s opening offer. A labor negotiator, for example, may begin to question the union’s position and thus be more willing to move toward management’s opening offer. 29

If a negotiator must give the first opening offer, or choose to do so for strategic reasons, then they should choose the most extreme offer, which can logically be defended and then carefully gauge the reaction to the offer. Perhaps the worst scenario of an opening offer is when the other side quickly accepts the offer immediately. This situation is, again, the  winner’s curse  : The offer is accepted, but the party is “cursed” with worry over why the offer was accepted so quickly without even one counteroffer.

Winner’s Curse

Negotiators who accept an offer too quickly and later experience remorse because they believe that (true or not) even though they left value on the table (gave too much or too little).

Norms

Once the two parties have exchanged initial offers, as in the grievance settlement example just presented, and each party has determined its reservation point and its initial offer, they are presented with the issue of how to arrive at a value somewhere in the range between the two initial offers, $7,500 and $12,500. This situation represents the basic distributive bargaining question: How to distribute the possible gain available to both parties? How does each negotiator proceed? What motivates them to make a particular counteroffer or accept/reject a counter offer made by the other party?

The parties negotiating this deal are trying to convince the other side as to the value of the offer being made.

Source: AP Images.

Negotiations seldom take place in a vacuum, but instead they are often guided by social norms and accepted practices that are based on the context of the situation. The two negotiators in this situation might proceed according to one or more common norms, which, research and practice indicate, will most likely guide their behavior. Four common negotiation norms that might influence their behavior include (1) relational norms, (2) fairness norms, (3) reciprocity, and (4) good faith norm.  Figure 5-5  provides a summary of each norm and the basis on which a negotiator develops and reacts to a proposal.

Negotiation norms

Social beliefs or attitudes that affect one’s behavior in a negotiation, such as a relational norm that values the relationship between the parties, a fairness norm that seeks consistency or equality, a reciprocity norm that reacts in kind to an action, and a good-faith norm that values integrity, honesty, and willingness to compromise.

Relational Norm

In a negotiation situation, the parties may be involved in a pure “exchange” relationship, such as a onetime car purchase, in which there was no prior purchase or relationship between the parties and no future one expected. The parties are only concerned with maximizing their outcomes in this instance. However, in reality, in most bargaining situations the parties involved do have a “communal” relationship: They are coworkers, family, friends, neighbors, or management and a union who recognize they have a continuing interrelated workplace relationship. The collective bargaining relationship rests upon iterative social processes, and the parties recognize the value of their relationship—and thus may be hesitant to exploit each other’s vulnerabilities. This critical relationship creates a cycle that starts with a high level of trust which causes both sides to consider an expanded scope of possibilities to settle thorny issues. This high-trust relational norm is critical to successful “win-win” bargaining processes, and any violation of the trust can easily lead to a very difficult “win-lose” bargaining behaviors. 30  This desire is referred to as a relational norm and can easily cause tension between a negotiator’s desire to maximize outcomes and a desire to maintain a positive relationship. Relational norms can cause

Norm	Negotiator's Use of the Norm
Relational	Desires to maintain a positive long-term relationship. Especially important in most labor–management relationships.
Fairness	1. Equality Evenly splits the difference between opening offers (50–50). The union, for example, proposed a new provision for shift differential equal to $1/hour. Management responds with an initial offer of .20/hour, and they agree on .60/hour, evenly dividing the .80/hour difference.
	2. Equity Split the difference between offers based on proportional inputs. For example, a profit-sharing proposal includes 60 percent net gain in productivity to be divided among the bargaining unit members because a study of productivity found that labor accounted for 60 percent of the gain, and capital and equipment 40 percent.
	3. Need Splits the difference between offers based on proportional needs of the parties.
	4. Status Quo Leaves the current situation unchanged. Many contract provisions are not changed during the negotiation of a new agreement because the impetus to keep current language, especially if it is working, is great.
Reciprocity	Responds to a counteroffer or action with one of equal value. For example, the union has increased its health insurance copay offer by $5, and thus management responds with a $5 decrease in the proposed copay.
Good-Faith	Negotiators will (1) honor and not retract an offer, (2) meet and discuss issues, (3) make sincere proposals, (4) provide copies of any data or information used during negotiations and share sources of information.

Figure 5-5

How Norms May Affect Counteroffers.

Source: Adapted from Michael R. Carrell and Christina Heavrin, Negotiating Essentials (Upper Saddle River, NJ: Pearson/Prentice Hall, 2008), p. 64.

negotiators to overlook maximum outcomes in favor of suboptimal or less efficient trades that are considered important in providing a more positive long-term relationship.

Why is the relationship norm important? Too often people, especially novice negotiators, view a negotiation situation in a purely exchange mode or as a onetime interaction, without regard for the future relationship between the parties. Therefore, their objective is “winning at all costs” or maximizing the gain in a purely distributive bargaining context. This onetime “car-buying” situation may be valid in many negotiation situations, but in many other situations it is not a valid assessment because the parties do have an important future relationship. Two major changes in the past 20 years have contributed to the increase of negotiations in which relationships are important. First, because work organizations have fewer levels between top management and entry-level jobs, bargaining unit employees are often given greater decision-making autonomy, and thus they are increasingly empowered to negotiate work issues with others within the organization. Second, organizations have become more inclined to develop partnerships with suppliers and other outside organizations, and therefore they are more inclined to maintain a long-term relationship. Thus, between union and management, the relationship norm is more important for the following reasons: 31

1. Future negotiations with the same party should be anticipated; therefore negotiators seek to avoid harming the future relationship between the parties. Thus, the relationship norm affects the negotiation outcomes.

2. People usually expect negotiated “favors” to be repaid at a later date.

3. Trust is critical to a long-term relationship; thus, agreements must include less nit-picking, what-ifs, or contingency clauses and a higher level of trust.

Fairness Norm

The negotiation process involves one of human nature’s most basic psychological drives: a need to maintain an appearance of consistency and fairness in both words and deeds (see  Figure 5-5 ). Psychologists call this need to appear reasonable “the consistency principle.”

Negotiations of all types provide many situations in which people seek consistency owing to the high level of uncertainty. The use of a norm to provide consistency in a bargaining situation can give a negotiator what is called “normative leverage.” If negotiators correctly anticipate the other party’s norm and therefore frame their proposal within that context, they can gain an advantage. 32  Negotiation researchers have concluded that the fairness norm may be the most commonly employed norm. It includes four major forms: (1) the equality norm, which negotiators often call the “50–50” or “split the difference”; it certainly sounds fair because both sides gain an equal amount. However a 50–50 split may not be fair unless the initial offers were equally fair to both parties, which is highly unlikely; (2) the equity norm or a distribution based on the proportional input of the parties: Employees compare the ratio of their own organizational rewards/efforts to the perceived ratios of other employees’ rewards/efforts where rewards include pay, recognition, bonuses, and so on, and efforts include level of work, hours, ideas, and so on. If they perceive the ratios are roughly equal, then they experience feelings of equity or job satisfaction. However, if they perceive the ratio is unequal, they feel unfairly treated by the employer and usually seek to balance the ratio by either increasing the rewards received or, more likely, reducing their efforts or level of work, or even seeking another job; (3) the need norm, which can be a powerful social norm––for example, a union may stress the need of their members to receive a pay increase that equals recent increases in cost of living to maintain their living standard; and (4) maintaining the status quo, or keeping all significant issues in their current state. This fairness norm of maintaining the status quo is often employed by labor negotiators and arbitrators. 33  Many labor negotiations, for example, leave provisions of the expiring contract unchanged and only change a few key ones. It’s not always assumed that the status quo is fair, but if it was accepted and used once, then it may be acceptable to both parties. And sometimes, it’s easier not to change than to reach an agreement on a change.

Most negotiators expect the other side to act with fairness in both words and actions.

Source: Stocklite/ Shutterstock.

Note that the common use of fairness norms in negotiations should not be confused with what is the “right,” “best,” or “fairest” solution. A fairness norm or any other norm is simply an external standard that people often employ to support their proposals or guide them in negotiations. However, the effective use of norms may provide a very convincing argument in support of a proposal and enable negotiators to convince the other side of the validity of their position.

Using norms or other justifications of proposals does not always provide negotiators with a means of reaching the desired outcome. Reasonable people can use different norms and facts to reach different solutions. However using norms or standards can assist negotiators in their efforts to reach an agreement in at least three ways: (1) making decisions based on a norm such as fairness is easier than making decisions on offers that are randomly tossed out; (2) an offer based on a norm is more persuasive than an arbitrary number, and thus more likely to receive serious consideration; and (3) it is easier to agree to the other party’s offer if it is based on a norm because you are agreeing to a principle, not a pressure tactic. 34  For example, would a negotiator find it easier to agree to “That is my final offer, it’s what I want, and I don’t have to explain it!” or “ I can’t agree to increase the uniform allowance anymore; it provides for the purchase of two new uniforms per year as well as weekly cleaning, which is what is needed.”

Reciprocity Norm

The tendency to respond to the actions of others with equal or similar actions is the source of the reciprocity norm. Someone who believes that “an eye for an eye” is the most reasonable response to another party is practicing the reciprocity norm. In social relationships, such as negotiations, people are often governed by “rules of reciprocity” meaning they seek to minimize the difference between the benefits they provide others, and the benefits received from others. 35  The underlying cause of this norm is a person’s sense of obligation—people often feel a strong need to respond in kind when they are given something of value from someone else—even a negotiator! For example, a union negotiator who drops her wage increase offer by 0.5 (one-half) percent may expect or even demand that management to counter with a 0.5 percent higher offer. 36

Good-Faith Bargaining Norm

In labor negotiations, good-faith bargaining is mandated as a part of the collective bargaining process by the National Labor Relations Act. The act requires the representatives of labor and management to meet at reasonable times and confer in good faith on wages, benefits, hours, and working conditions. This requirement includes active participation with an intention to reach an agreement and to sign binding agreements on mutually acceptable terms. It does not, however, require either party to make a concession or agree to a proposal. The good-faith bargaining norm is, however, a part of most negotiations. Parties expect certain behaviors from those who they are negotiating with such as (1) honoring what they propose in bargaining, not retracting an offer once made and accepted, and signing written agreements reached at the bargaining table; (2) willingness to meet at reasonable times and places to discuss issues; (3) making proposals on the issues at hand; (4) engaging in a process of give-and-take or compromise; and (5) providing honest information and, if necessary, sharing sources of information. A negotiator’s greatest asset in a negotiation is integrity because few parties will continue to meet with someone they no longer trust to be negotiating in good faith. Without such trust the parties cannot expect to reach an agreement, or if one is reached, may fear it will not be implemented as negotiated. For example, in one recent negotiation, management offered the union the exact amount of back pay the union had requested in its last offer. The union negotiator, however, surprised by the offer and fearing he may have asked for too little, turned it down, and said, “We’ve decided our numbers were wrong!” Management negotiators saw the rejection as bad-faith bargaining, and withdrew the offer. Unfortunately, in most negotiation situations, reasonable people can disagree as to exactly what behaviors define good faith. Thus, one party may feel the other has violated its rules of good-faith bargaining, and tempers rise or discussions are prematurely terminated.

Framing Positions

The issues have been identified, initial offers have been made, and now the parties attempt to persuade each other in an effort to maximize their gains. One way to do that is to “frame” each issue (or group of issues) carefully, using a norm or other justification to support a certain position. That is, decide exactly how the issue will be presented to the other side in a context that is convincing.  Framing  is recognized as a key tactic in the negotiation process.

Framing

Presenting an issue to the other side in a negotiation in a way that is convincing and causes the other side to “see” the proposal in a different light.

People often view the same issue quite differently, especially when they sit across from each other in negotiations. They naturally bring different perspectives, expectations, biases, and experiences to the table. So how should an issue be framed to persuade the other party to accept it? One can frame an issue in a slanted manner, one that puts their position in the best possible light: “A fair wage increase is 6 percent because that is what others have received over the past two years”; or in a nonjudgmental manner, which states the issue as a question and invites the parties to search for a solution: “How can we objectively estimate a wage increase?” This method of framing is less antagonistic and moves discussions toward a process of creative problem solving if both parties are open to using it. 37  It is extremely effective in solving the underlying problems of language, issues such as seniority, overtime distribution, or shift selection. Four different types of frames that one can consider using when presenting a proposal are described in  Table 5-2 .

The framing of an issue can greatly affect the outcome of the bargaining. Even a one-word change can significantly alter how both sides view the issues. For example, in the negotiations between two unions to merge the union employees of two organizations, the parties were reviewing the list of people. In some cases only one person could be retained at the salary and in position now held by two. In the case of one position, a negotiator stated, “Now in thinking about Taylor, he is too valuable not to keep in the foreman job.” The second negotiator who wanted his own person in that position needed to quickly reframe the issue of Taylor and repeated the statement with a one-word insertion, “In thinking about Taylor, he thinks he is too valuable not to keep him in the foreman job!” The issue of Taylor’s worth in the new organization was totally changed from fact to only his lofty opinion of himself by a one-word change in the framing.

Reframe Offers

One effective method of reframing an issue is to use a “unifying, open-ended, and problem-solving suggestion” starting with a “what-if” or “how.” For example, “How can the employees’ desire to honor their seniority standing when assigning overtime and the companies need for efficiency and productivity guide the overtime distribution language?”

Table 5-2

Four Types of Frames (Applied to Grievance Settlement)

Type of Frame	Goal of union’s approach to framing the issue	In response to management’s initial position: “The union’s request of $12,000 is too high ... ”
Reframing	Change management’s context from a cost decision to an employee morale decision.	Union: “Other employees are very interested in how management handles this case; the outcome will certainly affect morale!”
Focus frame	Change management’s context from a cost decision by focusing on the uniqueness of the grievance.	Union: “This is the only grievance of its kind in the past 50 years, and we both know there will never be another.”
Contrast frame	Change management’s context from a single payment of $12,000 to a much smaller, monthly stipend.	Union: “If we agree to add the amount to his base pay over 12 months, then your concern of his salary becoming the highest in the department is resolved.”
Negative frame	Change management’s context from winning to avoiding a loss.	Union: “You can wait to decide—but if we don’t come to agreement, then the union’s grievance committee will meet next week to decide if the issue should go to arbitration.”

Source: Adapted from David Venter, “Framing—An Important Negotiation Tool,” The Negotiator Magazine (March 2006), p. 1.

This statement brings together or unifies the positions of the two parties into an open-ended suggestion that focuses the discussion on finding a solution to the joint problem.

The value of two offers can be identical, but the manner in which they are framed or worded can substantially affect how they are received and thus possibly accepted. For example, in a research study people were asked to choose between two plans of action when three plants were scheduled to be closed and 6,000 employees laid off:

· Plan A: This plan will save one of the three plants and 2,000 jobs.

· Plan B: This plan has a one-third probability of saving all three plants and all 6,000 jobs but has a two-thirds probability of saving no plants and no jobs.

Then they were asked to choose between Plan B (same wording) and Plan C:

· Plan C: This plan will result in the loss of two of the three plants and 4,000 jobs.

The two pairs of choices contained the exact same values or facts—plans A and C both will save only one plant of the three, and 2,000 of 6,000 jobs. Yet 80 percent of the people in the study choose Plan A in the first set of options, but then 80 percent chose Plan B in the second set. The only difference was the positive framing of Plan A compared with the negative framing of Plan C. 38

Negotiators should, whenever possible, not simply reject an opponent’s offer, but instead reframe it or literally “change the frame around the picture” so it satisfies the interests of both parties.

Use of Framing Questions

Negotiators can use framing statements, as just discussed, when presenting offers, or they can use framing questions to change the context of an offer made by the other party. Examples of effective reframing questions include the following: 39

· Ask why:  Instead of treating your opponent’s offer as an adversarial position, use it as an opportunity to better understand his or her interest or to test the firmness of the position. For example, “Why did you choose that exact number?” or “Why are you so determined to settle on that number; where did it come from?” A powerful “why” question can invoke the fairness norm: “Why is that health care copay fair?” Even if the other party refuses to defend the fairness of their number directly, the very fact it cannot be easily defended can insert in their mind a strong doubt in their own position, and thus make it easier to achieve a concession.

· Ask why not:  If your opponent will not reveal the source of his or her position, asking “why not” can help uncover the real interests of the other party. For example; “Why not simply divide the difference equally?” or “Why not change the retirement fund assumptions and see what figure the actuary gives us?” The answer to your question may reveal important information about the true interests of the other party.

· Ask what if:  Instead of disagreeing with the offer of the other party, acknowledge it, and respond with an option. For example, “I understand you believe you must have a 6 percent wage increase. What if we agreed to that figure, but to help pay for it, health care premiums and copays were changed?”

· Ask for advice:  If asked in a constructive manner, the other party may develop an option that represents positive movement toward a settlement. For example; “How would you suggest I present that offer to top management when their past policy restricts us from offering a contract beyond one year?” or “I can agree to your wage increase, if you can find a way to cover our health insurance.” Opponents often appreciate the opportunity to help develop mutually agreeable options, and once involved, they may even develop a sense of ownership in the options suggested and thus help one of them become a settlement point.

Effective questioning and listening to responses is a critical negotiation skill. In the alternative, if negotiators spend more time arguing for their positions and defending their stance on issues than they do asking questions, they cannot gain important insights into the implicit needs and concerns of the other party, and therefore cannot respond with proposals that are likely to reach a settlement. Effective use of questions can break a pattern of arguing for and against positions and move negotiations into conversations that uncover the true interests of the parties, and therefore potential positive outcomes. Disagreement on how overtime assignments are made is a typical collective bargaining issue in which such questioning might be helpful. In this example, employees in separate work areas share the same job title with similar job requirements. They do not want to be shifted from their assigned areas to cover for absent coworkers and have had a contract that limits such movement. This results in increased overtime costs for the employer because when workers are absent and those on duty cannot be moved, off-duty workers must be called in to cover the work. Management assumed the union had this provision in its contract as a way to maximize overtime pay; but the effective use of questions by both sides may uncover a different motivation. For example, the employees might object to being moved to a different location because although they may hold similar jobs, they question if they can, in fact, do the other job well; or they may believe the other work location has a more rigid schedule that could cause discipline problems. Uncovering these concerns could give management a way to address them during the negotiations, such as providing remedial training before moving a worker from one location to another, or by changing the hours of work where necessary to avoid tardiness.

Applying Norms and Frames

Applying the norms and framing just discussed to the grievance settlement illustrated in  Figure 5-4  shows how a negotiation can progress from its opening offers to agreement. The union made an opening offer of $12,500, and management made an opening offer of $7,500. Each party then decided, but kept confidential, its bottom line or reservation point. The union decided they could accept a minimum of $8,000 or they would take the case to arbitration. Management decided their absolute limit was $11,000, and thus the range of possible settlement amounts, or zone of possible agreement (ZOPA), became $8,000–$11,000, although neither side could know the range because both didn’t know the other party’s reservation point. Management made a first offer of $7,500, so it is likely that the union would make the first counteroffer. If the union used the “good-faith bargaining norm” and decided to show a willingness for give- and-take by making a counteroffer of $11,000, and frame the offer with; “We are very pleased that management is willing to settle this unique grievance rather than go to arbitration. To try and resolve the issue today, we are willing to come down $1,500–$11,000.” The management negotiators realize that $11,000 is their reservation price, and if they are particularly anxious to close the deal and avoid arbitration, or perhaps if they are inexperienced negotiators, they might agree to $11,000. But they likely would rely on the “equality fairness norm” and offer to split the difference evenly of $3,500 ($11,000–$7,500) and thus offer $9,250. They would decide to make this counteroffer because it is an equal sacrifice by both parties and it’s not a round number and it is based on a defensible position, which makes them more comfortable in offering it to the union. Because the new counteroffer of $9,250 is higher than their reservation price, the union might accept it if the grievant was significantly motivated to settle. Or, the union might decide that because management has only made one counteroffer, they have not made their “highest and final offer,” and thus the union offers to make a second, but smaller concession of $1,000. At this point management might agree to the union’s second counter of $10,000 and thus close the negotiation. Both parties will likely believe they have negotiated a “good deal.” The union gained $2,500 over management’s opening offer and realized $2,000 more than its reservation price. Management also perceived they gained because the final price was $2,500 less than the union’s opening offer, and they paid $1,000 less than their own reservation price.

Integrative Bargaining

The integrative bargaining technique, like the distributive technique, was largely developed within the field of collective bargaining and labor negotiations. Today it has evolved into a popular alternative to distributive bargaining. Integrative bargaining is a more cooperative approach to negotiation or conflict resolution. It is often referred to as a “win-win,” “mutual-gains,” or “interest-based” approach. Unfortunately, the term “win-win” today has become a cliché in our society, and thus it may refer to any collaborative approach. The integrative approach, like distributive bargaining, involves making concessions to reach an agreement, but in addition, it involves searching for mutually profitable options and logical trade-offs. It is also called an “expanded-pie approach” (in comparison with the distributive fixed-pie approach) because negotiators search for better proposals than the obvious ones that might only meet their own interests. Integrative techniques include a clear understanding of the issues, open sharing of information, and the joint exploration of solutions that benefit both parties. 40  In an integrative bargaining process, the parties generally cooperate to achieve maximum total benefit of the final agreement while also competing to divide the value of the package.

The essence of the integrative process is described in the classic story of two sisters who each coveted the same, and last, orange. They decided to share it and used the distributive tactic of splitting it into halves. After each sister took half of the orange home, one sister, who wanted only the juice, squeezed out the juice, drank it, and threw out the peel. The other sister, who only wanted the peel for a cake she was baking, threw out the pulp and added her half peel to the cake batter. Neither sister considered expressing her true interest in the orange but rather chose to negotiate for the whole orange. Both sisters would have realized a greater settlement—one sister all of the juice, the other all of the peel, if only they had chosen to be open and truthful about their real interests.

Integrative bargaining  can be broadly defined as a negotiating process in which the parties strive to integrate their interests as effectively as possible in the final agreement. The integrative negotiator generally strives to achieve two goals: (1) to create as much value as possible for both sides, and (2) to claim as much value as possible for their own interests. It does not require a negotiator to give in to any demands made by the other party or to sacrifice any of their own objectives. It does require the parties to seek out creative options and not simply focus on trading concessions on issues. It generally requires the existence of several issues to be negotiated, which enables the negotiators to find common ground on some issues, trade-off positions on some issues, and claim value on some issues. To create value and discover mutual benefits or common ground on some issues requires the parties to share information and present more options than is typical of distributive bargaining. 41

Integrative bargaining

A negotiation method in which both sides seek ways to integrate the interests of both sides into mutually agreeable options.

Integrative versus Distributive Bargaining

The integrative bargaining process differs from the distributive process in many aspects, although neither are rigid concepts, and therefore in practice a negotiator might use aspects of both in a given negotiation. However it is helpful to recognize that the two methods begin with distinctly different strategies. In distributive bargaining both sides view their own goals as being in direct conflict with those of the other side. Thus, whatever one side gains, the other side loses, on each issue. The negotiators approach each issue as a “fixed pie.” Thus, the larger one piece is, the smaller the other. Each side wants to maximize its share of the resources, or pie. Generally all the negotiators involved are prepared to use distributive bargaining because many negotiators use the method, and if one side uses it exclusively, then the other is usually forced to adopt it as well. Negotiators who wish to triumph over the other party or maximize their outcome at all costs often choose the distributive or “win-lose” approach. In negotiations involving lawyers, and the majority of lawsuits is resolved through negotiation and not the courts, distributive bargaining is often the method utilized. Lawyers either through training or choice, or both, often believe they can gain more for their clients by using distributive tactics rather than through integrative tactics. Their legal training is focused on the “win-lose” thinking of conflict resolution. Lawyers will focus more on improving options away from the table and/or utilizing social norms to gain an advantage. Thus one lawyer advises other lawyer-negotiators to think of distributive bargaining as the “cake” and integrative bargaining as the “frosting”—rather than the reverse as many skilled negotiators believe! 42  In integrative bargaining, both parties begin with a spirit of collaboration and seek to identify mutual gain options, or “an expansion of the pie,” as well as a gain in their share of the resources. To help recognize the differences, consider the factors and common strategies of the two methods in  Table 5-3 .

Table 5-3

Common Differences between Distributive and Integrative Bargaining Techniques

Factor	Distributive Bargaining	Integrative Bargaining
1. Number of issues	Usually consider one issue at a time	Several issues are negotiated
2. Common name	“Win-lose”	“Win-win”
3. General strategy	Maximize share of a “fixed pie”	“Expand the pie” by creating innovative solutions that meet some interests of both parties
4. Relationship of the parties	One time	Continuing, long term
5. Interests	Kept hidden	Shared with other party
6. Possible options	One expressed position for each issue	Many options; create new options for maximum mutual gain
7. Information	Kept hidden	Share with other party; explain the “why” of their position— explain their interests

The Integrative Negotiation Process

Complex negotiations, such as the collective bargaining process between management and union representatives, usually involve multiple-issue negotiations. Negotiators might use the single-issue distributive process described in the prior section for each of the 10, 20, or more items at issue, settling each one separately, one at a time. By comparison, an alternative method would be to consider all the issues together simultaneously and only reach agreement on all issues at the same time, but that can easily become unwieldy. Thus, negotiators using an integrative model try to divide the issues into general groups, such as highly important, somewhat important, and those of little value. Usually negotiators prefer to start negotiations by quickly resolving a few of the issues of little value, which creates a positive atmosphere and a sense of progress. 43  Another integrative approach is for both parties to agree to bring only their ten most critical issues to the table, in addition to the economic issues. This may save time and help the negotiation process focus on fewer, more important issues and causes the parties to drop some of their less important issues from the discussions.

Principled Negotiations

Roger Fisher and William Ury in their landmark negotiation book Getting to Yes discussed four key components of integrative or interest-based bargaining with the strategy they called “principled negotiation.” Those four key components are as follows: (1) Emphasize positions versus interests, (2) separate people from issues, (3) focus on objective criteria, and (4) develop mutual gains options. Fisher and Ury explain how most traditional negotiators use the distributive model of negotiating or a strategy of distributive bargaining in which each side makes an opening offer, determines their resistance point, guesses the resistance point of the other side, and then begins to haggle over the perceived difference. Each side gives reasons why its position is the “best” and offers to make small concessions until an agreement is reached. Each side continues to make concessions, giving up part of its interests, until it uncovers a settlement point. The entire negotiation process is about each negotiator presenting and defending his or her position. Often the negotiators in defending their positions tend to get emotionally involved and locked into arbitrary positions. The more negotiations focus on positions, the less they discuss what they are really interested in: issues.

Key #1: Positions Versus Interests

Many negotiators engage in distributive bargaining because they mistakenly believe they must keep their real interests hidden. Therefore they only reveal their positions—often a specific value to the other party—and assume the other party will only reveal its position. Then they proceed to the “ritual dance” of trading concessions and trying to find a middle-ground number both will accept. Principled negotiations require both parties to go beyond their stated positions, and instead discuss their desires, needs, and fears that led them to their stated position. These factors are called their interests.

A position may be defined as the specific demand a party has chosen, whereas their interest includes the underlying needs, desires, concerns, and fears that caused the party to choose the position. Principled negotiations involve revealing and reconciling interests rather than simply defending and exchanging positions on issues. It works because in most cases several positions exist that may satisfy an interest. Thus, if the other side’s stated position is unacceptable, then it is likely that other positions exist which are acceptable but can only be found by discussing each side’s underlying interests. By openly discussing their true interests, both sides have a greater probability of reaching a settlement.

Positions versus interests

The specific demand a party makes at the bargaining table (position) as compared with the party’s underlying needs, desires, fears, or concerns (interest).

Consider the negotiations between the union and employer on job assignment. The employer’s position was that employees with the same job titles and job requirements should be moved to any work location when the need arose. Furthermore, the employer’s position was that assigning employees to work locations was an essential management rights issue and yielding to the union’s stand was unacceptable. The employer’s real interest, however, was to reduce overtime costs, and management knew that if employees could be moved from their primary work location to cover

Table 5-4

The Positions and Interests of Work Assignments

Party	Positions	Interest
Management	Change work assignment clause of the contract. Maintain management rights.	Reduce overtime costs.
Union	Work assignment clause was a gain in a prior negotiation.	Keep employees from being disciplined for failing to perform in temporary assignments.

for an absent coworker, such costs would go down. The union’s position was that it had negotiated the current job assignment in prior negotiations and it had no incentive to give it up. The union demanded that the employer hire more people if coverage was an issue. The union’s interest, however, was quite different. Union members were reluctant to move to other work locations because, although job duties were similar, they were not exactly the same. The employees felt they lacked the necessary training to perform some of the work assigned and feared being disciplined if they could not perform.

Table 5-4  presents a summary of their positions and interests.

Key # 2: Separate People from Issues

People conduct negotiations, and they have feelings and egos and often experience anger and fear, which can interfere in, if not in fact prevent, a settlement from being reached. Unfortunately, some negotiators allow their feelings about someone on the other side to influence their behaviors. Such responses to the positions taken by other parties can easily derail a bargaining situation that might otherwise be successful. This is particularly true if the parties are in a long-term relationship. The classic case is between a wife and husband who are discussing where to spend Labor Day weekend. The husband wants to play golf with friends, but the wife wants to go to their cabin on a nearby lake.

These are the keys to separating the people involved from their positions: First, avoid emotional outbursts or anger, which is likely to be viewed as a personal attack on the other party—thus you are discussing the people, not the issues. Second, don’t discuss an issue as a personal basis, such as, “You always want to go to the lake.” Instead discuss the issue: “I understand you want to go to the lake. What is it exactly you want to do at the lake?” Third, try to see the situation from the other side’s perspective and recognize its goals. In almost any negotiation, this skill can be critical. Most people have reasons for their positions. If you can “step into their shoes” and view the situation from their perspective, you gain an appreciation for their position and can often find mutually agreeable solutions. Thus, if the wife responds with “I need the peace and quiet of sitting on the porch and reading uninterrupted for hours, but still want to be with you for dinner and walks along the lake.” Then the husband might respond with “I understand what you are saying, how about if we go to the lake, but I invite my friends down for rounds of golf at the course nearby on Saturday and Monday?”

Key # 3: Focus on Objective Criteria

Distributive bargaining is a contest of wills and emotions, often decided by which party can bluff the best, shout the loudest, or talk the longest. A party can make an arbitrary demand such as, “The wage offer is 2 percent because I say it is.” Then the other party counters with its own arbitrary demand, “We won’t take less than 4.5 percent; that’s it.” Too often the side with the greatest power prevails or no settlement is reached. In interest-based bargaining, the parties present offers based on objective criteria such as facts, principles, or an outside standard. Objective criteria include such factors as financial data, cost of living changes, past precedent, documented industry examples, and similar results from other settlements. The key to interest-based negotiations is that when parties propose a solution they provide the objective criteria on which they based their number. They can answer a key question: “Why is that a reasonable number?”

By sharing third-party information, the participants in an integrative bargaining situation can create a collaborative atmosphere conducive to reaching mutually satisfying results.

Source: Andersen Ross/ Getty Images.

Key # 4: Develop Mutual Gains Options

Parties will not agree to a proposed settlement unless they perceive it to be superior to no agreement. If negotiators only view a negotiation as the haggling over one issue, such as wages, then often no settlement satisfies both parties and thus negotiations end unsuccessfully. Negotiations often fail to have multiple options for several reasons: 44  (1) it is not natural; what is natural is to think, “This is what we want, now how do we get it”; (2) people view bargaining as simply narrowing the gap between two initial offers; (3) the “fixed pie” constraint—people assume there exists a limited amount of resources to distribute; and (4) people see the problems of the other party as their problems and don’t easily recognize the need to find mutually satisfactory solutions.

Mutual Gains Options

Negotiation offers that include some items or interests sought by each of the parties, thus both sides realize some of their goals.

To create multiple options, the first step is to agree to discuss openly the true interests of both parties. Once true interests and not just positions are known, the parties can consider different ways each party’s interest might be satisfied. Consider, for example, a situation in which the union desired a guaranteed across-the-board annual bonus, but management insisted on one that varied according to the company’s net profit level, which provided workers an incentive to increase performance. Union negotiators insisted that the employer had the “ability to pay” higher bonuses because in the last few years it had experienced higher profits and revenue. And management insisted that it had the “ability to pay” only if the bonus increase was linked to future increased net profits. Management, in an attempt to present a mutual-gain option, proposed a bonus formula with a fixed bonus amount per year of $100,000 plus a variable amount that rose as the company’s net profit increased: 6 percent of net up to $300,000; 8 percent of net between $300,000 and $1.0 million, and 10 percent of net above $1.0 million. The key to the proposal was that it provided a mutual gain for both sides; the union achieved a minimum bonus of $100,000 but also a higher bonus as net profits rose. And the company was not required to increase the bonuses unless it had the profit to pay for it. Interestingly, a profit sharing plan or a onetime bonus clause now appears in approximately 25 percent of all U.S. labor contracts as a means of providing higher wages if an employer experiences greater profits during the life of a contract. 45

The Categorization Method

Although several negotiation processes could be described as integrative, the  categorization method  is a basic one that can be easily learned. Once the categorization method is understood, one can build on and expand this basic interest-based method into a more robust interest-based method. There are five steps of the categorization method of integrative or “win-win” bargaining ( Figure 5-7 ). The process is presented here as a linear process, one in which the first step must be followed by the second step, and the second by the third, and so on. However, in reality, negotiators experienced in interest-based bargaining may not use a linear model but instead choose to follow a process that best meets their interests in a given situation.

Categorization Method

An integrative negotiation method that includes: exchanging information, developing a common list of issues, agreeing on compatible issues, exchanging equal value issues and resolving remaining issues using distributive bargaining.

Unlike the distributive process, the parties generally do not begin by tossing out a number—their opening offer or anchor on an issue. The first step is for the parties to begin by exchanging information and seeking to identify all of the issues to be negotiated, listing them, and each side explaining their interests on those issues. The negotiators seek to learn about the other party’s concerns and interests and to identify potential issues of mutual interest. Rather than treating the dialogue as requiring a response to any particular issue, a negotiator is focused on listening and interpreting what is presented. Key techniques in this first step include the following: 50

· Use  active listening.  Active listening is perhaps the single most useful interest-based bargaining skill because it indicates that one genuinely seeks to understand what the other person is thinking, feeling, and needing. Listen closely to the other party’s explanation without interrupting, disputing a fact or belief, or objecting to a statement, even if it may be critical of your position on an issue. Take notes of their discussion and watch body language. Perhaps most important, ask reflective questions to show you are listening: “So your members are concerned about job security in the future because of the proposed merger?” and probing questions: “Are you concerned about the merger because it may cause layoffs or because your members may end up in lower positions on the merged seniority list?”

· Ask  open-ended questions  about the level of need, interest, or concern of the other party on each issue discussed. Ask “why” an issue is important to help better understand the position presented: “Why have you proposed a 20 percent increase, why not 10 percent or 25 percent?”

· Express empathy for the other party’s feelings, using  reflective statements  such as, “I can see why it is important that you have delivery by that date” but without agreeing to their position.

STEP 1: Exchange information and identify all of the issues to be negotiated. Each side explains its interests and concerns on the issues.

STEP 2: Develop a common list of all issues that were discussed by either side during the first step and seek to classify each issue as (1) compatible—similar interests; (2) exchange—approximately equal value that may be traded; (3) distributive—those issues that are not compatible, cannot be traded, and therefore whose value must be distributed.

STEP 3: Reaching final agreement on each of the compatible issues and removing them from further negotiation.

STEP 4: Trading, or exchanging issues of approximately equal value; in some cases several issues may be included in a single exchange.

STEP 5: Resolution of any remaining issue(s), which often is accomplished through the distributive bargaining on each separate issue.

Figure 5-7

The Five Steps of the Categorization Method of Integrative or “Win-Win” Bargaining

· Probe for the other side’s willingness to  trade off  an issue for another issue—a key to interest-based bargaining. Ask questions such as, “Would you be willing to give up the new subcontracting language if we added language to guarantee no layoffs?”

· Assert your own needs: Explain your interests and positions on issues: “Because of EPA requirements it costs us three times as much to paint the housings ourselves compared with outsourcing like our competitors.”

· Refrain from making personal attacks on the other people or criticizing their positions.

The second step in the categorization method of interest-based bargaining negotiations generally begins with the parties developing a common list of all issues of possible interest that were discussed by either side during the first step. They do not assume they have opposing goals on all issues. Instead, together they review the issues and classify them as one of three types: (1) compatible issues, those with identical or very similar goals and thus agreement can be reached quickly and the issue settled; (2) exchange issues, those of generally equal priority that can be traded one for the other. Therefore one party achieves its goal on one issue and the other party achieves its goal on another issue; or (3) the remaining distributive issues, often few in number but important, such as wages, health insurance, pensions, and so on, which may be settled in a distributive process as discussed earlier.

The third step involves listing, discussing, and then reaching final agreement on the compatible issues and therefore removing them from further negotiation. This step often passes quickly because the parties are essentially in agreement as to substance and usually only need to record the specifics of the issues. However, this step can be critical in establishing a positive climate for the entire negotiation process. By first identifying at least some issues and reaching mutual agreement, the parties involved begin the process with a sense of openness, collaboration, and accomplishment.

The fourth step involves the “trade-off” of issues, the heart of the integrative process. Both parties review the list of issues identified in the first step, with the compatible issues removed in the second step, which leaves the remaining unresolved issues that might be resolved through the exchange of one issue for another. In an open “brainstorming” process, either party can suggest exchanges of issues of approximately equal priority or value. In the process one party receives its position on an issue, but in return gives the other party its position on another issue. In some cases, two or more issues might be exchanged for a single issue if the approximate values are equal. If all remaining issues can be exchanged, the negotiation process is over, but in most situations one or more unresolved issues are left on the table. Negotiators may package several issues to create gains for both sides.

The fifth step is the resolution of the last issue(s), which often is accomplished through distributive bargaining. However, because the prior steps have resolved most of the issues involved, both parties are less likely to walk away from the table over the last issue. Why? First, they have reached agreement on several important issues that will be lost if they walk away; second, the integrative process has established a positive bargaining climate that is more conducive to resolving the last issue; and third, both parties have invested time and effort into the negotiation and therefore are more motivated to reach a final settlement.

Now we apply the five steps of the categorization method of interest-based bargaining just presented (see  Figure 5-6 ) to a labor–management contract negotiation. The Ohio Metals Company and Local 56 of the Primary and Sheet Metal Workers of America, AFL-CIO, developed a positive labor–management climate over their 50-year relationship. As their current three-year contract is about to end they begin negotiation talks for a new contract. In general, the company, the union, and the workers have experienced prosperity in recent years, and certainly they expect to continue their positive relationship for many more years. In their first meeting they openly share several important sources of information. Management provided the company’s financial information for each of the past three years as well as sales projections for the current year. The union negotiators provided copies of contracts negotiated within the past year within the industry and for similar regional employers within other industries. In addition, the union shared the results of a recent survey of its members that indicates what issues are important to them and their rank priority.

In their second meeting, the union and management negotiators lay their issues “on the table” or openly discuss each issue they would like to negotiate, and explain their interests or position on each issue. Management explains it is seeking a five-year contract that would enable it to enter into longer-term contracts with buyers, which they have discussed often over the past several months. Management would also prefer a drug-testing program in cases involving accidents or injuries to protect the interests of employees, the owners, suppliers, and customers. In exchange for any wage increase, management also wants workers in the bargaining unit to pay a greater portion of their health insurance, which has risen sharply since the last contract negotiation. Finally, management presents a proposal that would allow it to subcontract work to outside firms under certain conditions. The union negotiators present several economic items that they believe are needed to increase the total value of the contract until it is closer to other contracts in the region. Those items include a wage increase of 5 percent, the initiation of a profit-sharing plan to include 15 percent of net profits annually, an increase in the pension benefit formula, three days of paid funeral leave annually, a monthly clothing allowance, and an increase in the current shift differential provision. In addition, the union leaders present three noneconomic job security issues of importance to their members: a no-layoff provision, overtime assignment based on seniority, and a no-lockout provision.

In their next meeting (the third step) the negotiators review the common list of items developed in the previous meeting and agree they have compatible interests on three of the 13 issues. Both sides desire the security of a long-term contract and thus agree to a five-year term for the new contract. Both also agree that a new drug testing policy is needed and that testing should only be conducted in cases involving accidents or injuries. Finally, both agree that disruptions over contract disputes that can be settled through the grievance arbitration process provided in the contract are harmful to all parties involved, and thus should be prevented through a “no-strike/no-lockout” provision. With ten issues left on the table, the two sides began looking for items that they could exchange, the fourth step.

In general, this exchange process involves one side receiving its desired position (or something close) on one issue by giving the other party its position on another issue. In the first exchange, both sides agreed to the union’s proposal on job security—a no-layoff clause, in exchange for management’s proposal on subcontracting—which allows up to 10 percent of the bargaining unit jobs to be subcontracted to outside firms for economic reasons. Next, they exchanged economic issues of approximately equal value; first, the union’s pension increase proposal of 2 percent for future retirees in exchange for management’s shift differential proposal (no change); and second, the union’s new clothing allowance proposal is traded ($50 per month) for management’s funeral leave proposal, which combined funeral leave with personal leave and reduced the total number of days per year by two. Then after several proposals were presented on the remaining issues, management’s profit-sharing proposal, which changed the current program to 10 percent of net profits, was exchanged for the union’s proposal for overtime to be voluntary and assigned based on seniority. After these four trades involving eight issues, only two issues remained on the table: wages and health care insurance. The negotiators on both sides at this point felt a sense of accomplishment because 11 of the 13 issues had been resolved. However, they also recognized that the two remaining issues were critical ones that both sides at the start had listed as top priorities and were high-value items. The issues were recognized as zero-sum economic issues. Thus, they began a distributive bargaining process on each item independently. Eventually, by making counterproposals with concessions, a settlement point was reached on both issues, and thus with all 13 resolved, an agreement was reached.  Table 5-5  summarizes the issues involved, positions of both sides, and bargaining category (compatible, exchange, distributive) used in the bargaining.

Table 5-5

Labor Contract Negotiations Through the Categorization Method

Issue Number	Description of Issue	Management’s Initial Position	Union’s Initial Position	Categorization Bargaining Category
1.	Length of contract	5 years	4 years	Compatible
2.	Pension increase	None	2%	Exchange (for #9)
3.	Wage increase	1%	5%	Distributive
4.	Profit sharing	10% of net	15% of net	Exchange (for #13)
5.	Drug-testing program	For cause only	For cause only	Compatible
6.	Health insurance	Employees pay 20%	Continue current program co-pay	Distributive
7.	Paid funeral leave/ Personal leave	4 days	6 days	Exchange (for #12)
8.	No strike/No lockout	Continue current provision	Continue current provision	Compatible
9.	Shift differential	10%	15%	Exchange (for #2)
10.	Subcontracting	10%	0%	Exchange (for #11)
11.	Job security	No provision	No layoff provision	Exchange (for #10)
12.	Clothing allowance	$25/month	$50/month	Exchange (for #7)
13.	Overtime	Management Right to assign personnel to overtime	Voluntary and based on seniority	Exchange (for #4)

Source: Adapted from Michael R. Carrell and Christina Heavrin, Negotiating Essentials: Theory, Skills, and Practices (Upper Saddle River, NJ: Pearson Education, 2008), p. 93.

Interest-Based Bargaining

In recent years a new collaborative negotiation process called interest-based bargaining (IBB) has emerged and is gaining support. Some experienced negotiators see IBB as an entirely new process, different from distributive and integrative, while others see it as an evolutionary form of integrative bargaining. The Federal Mediation Service is credited with developing the steps of IBB, in which parties (1) share information; (2) agree to search for mutually agreeable solutions; (3) use brainstorming to create new options; (4) focus on the facts and issues, not personalities or leverage; (5) negotiate and focus on parties’ real interests, not positions as suggested in Getting to Yes; and (6) commit to IBB training and use of IBB principles. 46  John Beck of Michigan State University has successfully trained negotiation teams in IBB from a variety of industries, including General Motors, Kraft Foods, Lansing, Michigan’s Sparrow hospital, and the Michigan Nurses Association. Rosemarie Kraeger, superintendent of Rhode Island’s Middletown Public Schools decided “there had to be a better way” to negotiate contracts, which had always been painful and required several days. Thus Kraeger sent her teams to the Harvard University Program on Negotiation for training in IBB principles. The result? Kraeger said the teams successfully settled two contracts—in “a matter of hours”—because the teams learned to work together to find mutually agreeable solutions! 47

IBB Steps

The IBB process includes five steps, as illustrated in  Figure 5-6 . The first step involves bringing the parties together in joint sessions to identify and clarify the issues to be resolved. In this step, positions such as “we need a 5 percent salary increase across the board” are

In the Rhode Island Middletown Public Schools management and union negotiators were trained in interest-based bargaining principles and were able to settle new contracts “within hours”!

Source: Yellow Dog Productions / Getty Images.

avoided, and instead each issue is carefully written, and the parties reach agreement on the list of issues to be resolved. The second step involves the parties caucusing separately to specify their own interests on each issue listed in step 1. Then the parties come together and present their list of interests without justification or criticism of the other party’s interests. Step 3 involves brainstorming for as many creative options as possible to solve each issue. No option is judged, nor is any option rejected at this step. Step 4 is the evaluation of all the options developed in step 3. The standards for the evaluation of each option are as follows: (1) Is it feasible: Can the option be actually implemented? (2) Is it beneficial: Will it satisfy the interests of one or both sides? and (3) Is it acceptable: Do both the union and management teams agree to the option? Only if an option passes all three standards is it adopted; thus, neither side is ever required to accept an option.

Figure 5-6

Steps in the Interest-Based Bargaining Negotiating Process

Source: Jerome T. Barrett and John O’Dowd, Interest-Based Bargaining: A User’s Guide (Victoria, BC, Canada: Trafford Publisher, 2005), p. 70. Used by permission.

If no option is found for a particular issue, the brainstorming begins again. Step 5 includes the two sides in a joint session agreeing by consensus on the options that satisfy interests. 48

The advantages of IBB compared with traditional negotiation methods may include the following: (1) By focusing on interests and not stating positions, negotiators will have improved communications and thus are more likely to fully understand the underlying interests of the other party, allowing them to do most of their work in joint open sessions; (2) the joint development of options through brainstorming is more likely to uncover additional ideas and thus superior solutions to problems; (3) traditional methods that focus on defending stated positions are more likely to break down because the parties become too invested in their positions instead of trying to uncover new options; and (4) the focus on interests is more likely to cause the parties to explain the critical “why” behind an interest or proposal. Potential disadvantages of the IBB method may include the following: (1) The method may use a great deal of time discussing interests and possible options when a mutual solution could be reached just as quickly using more traditional methods, (2) IBB negotiators may have difficulty transferring a proposed creative option into a practical, concrete solution; and (3) the standards suggested by IBB negotiators are often not precise, and are subjective, thus not easily agreed to by both parties. 49

Reaching Agreement

Point of Crisis

Finally, negotiators reach a decision. Once all the proposals and counterproposals have been presented, and both sides believe they can’t give any more, the parties either reach an agreement on all issues or stop talking. If agreement cannot be reached, this may be the point of crisis. Various techniques involving neutral third parties such as mediation and arbitration are available to bring the parties back to agreement. Job actions such as strikes and lockouts may be utilized, and although they receive a great deal of publicity, they are seldom used to resolve contract disputes. Noted mediator Ted Kheel refers to this crisis point in negotiations as the crunch, or a point of no return that occurs when both sides realize that “some deadline will cause no decision to become the final decision.” Up to this point both parties may feel little pressure to move significantly from their position. The crunch, however, is a signal that it is time for a decision to resolve the remaining issues or to declare an impasse. As an example, Kheel offers the tactic of CIO founder John L. Lewis, who, when negotiating for the United Mine Workers, practiced a “no contract, no work” strategy, meaning that the termination date of the current contract would not be extended. Thus, if a new contract was not reached by that date, the members would immediately strike. Then both sides felt “the crunch” to settle before the old contract expired—management wanted to avoid lost production and workers, lost wages. Most UAW negotiations during the Lewis period reached a settlement before the termination of the old contract, but the others experienced a strike, as Lewis had promised. 51

The Closing Stage

Knowing that an agreement has been reached, the people involved become psychologically committed to the agreement and are often eager to move quickly to sign the papers, shake hands, exchange money for goods, and so on. However, it is very likely that additional concessions will be made after the parties think they are done.

Consider the quote often attributed to Yankee great Yogi Berra, “It ain’t over till it’s over!” If one party senses that the other party is overly anxious to close the deal, then they may try to extract last-minute concessions. Patience at this point is critical. A negotiator must take time to finalize the deal, remembering that both sides want the agreement; not make last-minute concessions just to close the deal, remembering that these concessions may be just as, or maybe more, valuable than any of the initial concessions. Also, consider that every once in a while, after months of fruitful talks, when “mutual gains” have been achieved, one side or the other might reject a “win-win” deal at the last minute for no apparent reason. As one negotiator explained, it may simply be because of “the knucklehead theory”: The knuckleheads fail to recognize and accept a good deal. 52

If any last-minute concessions are requested (e.g., if the other side makes a last-minute demand such as, “I forgot one item that we can handle easily. ...”), consider one of three responses: 53

1. Silence  At this stage of the negotiations, judicial use of silence is advisable. Say nothing; any response may be perceived as a sign of weakness. Continue to close the deal at hand with no changes.

2. The Walkaway  A skilled negotiator may be able to project a personal indifference to settling that will concern the opposing side that has certainly become invested in reaching an agreement. This may be the best time to suggest you can—and will—use the walkaway and retreat from the deal if the other side tries to extract a final concession.

3. Reciprocate  This response technique involves inducing the other party to change a position, by indicating that if he or she will change his or her position on an issue, you will reciprocate and make another approximately equal concession. You should respond to their final demand for concessions by indicating your willingness to agree if they make a similar concession, and conclude the negotiations. Thus, “To accept this last item of yours, we agree to a signing bonus of $100, if you decrease the final cost of the clothing allowance by $100.

Of course, at the conclusion of a negotiation either party should not only be prepared to respond to last-minute demands by the other party, they might also consider making a demand, using the classic  nickel-and-diming  tactic, also called “the nibble.” If a party believes the other side is too anxious to settle, before signing any papers they might insist on the addition of one small overlooked item—a “nickel or dime” item, which might be one the other side can easily agree to, thereby increasing the value of the negotiated settlement. For example, the tactic is often used when buying a car when the car’s price has been set by the company and the salesperson has limited authority to alter it. However, the salesperson can usually provide something of value (e.g., next-day delivery, a higher price on a trade-in). If one misjudges the situation, however, the nickel-and-dime item could become a deal breaker when the other party walks away, unless the nickel-and-dime request is quickly withdrawn. 54

Nickel-and-diming tactic

A last minute demand by one party made to take advantage of the other party when they are about to reach agreement.

Tentative Agreement

It is important to realize that all tentative agreements (TAs) reached by representatives of management and the union are just that: tentative. At this point, the union leadership holds informational meetings to present the details of the tentative agreement to the members and to answer questions. Then, according to the rules of the union, the agreement must be ratified (receive a majority positive vote) by the members of the union. If the union negotiators have done a good job determining the priorities of the members, informing them during the negotiation process, and estimating what they will or will not accept in a new contract, then this step is routine. To show solidarity with their leadership, members usually accept the contract offered to them as the “last, best, and final” one. The ratification process involves a secret-ballot process that can take several days to allow all members at all locations the opportunity to vote. The process can be complicated, however; for example, in 1996, the International Longshoreman’s and Warehouse Union rules required a 60 percent majority of all voting members across the United States. The vote failed because the Los Angeles and San Francisco local union leaders led a successful campaign against the proposed contract, and the 60 percent vote required was not reached.  55

Tentative Agreement

In labor negotiations the agreements on issues reached at the table are only tentative agreements—that is subject to ratification by the bargaining unit members.

The degree of formality and detail required of a final agreement depends on the value, length of time, and past relationship of the parties involved. However, this often requires that the individual and packages of articles and provisions that have been agreed to, signed-off on, and thus taken off the table over several weeks or months must now be carefully combined into one document: the final agreement. As explained in  Chapter 10 , a written agreement is required by the National Labor Relations Act, but even if it wasn’t, it would be advisable because it serves three purposes:

1. Communication . People often hear what they want to hear, they don’t listen carefully to details, or their memories of verbal agreements fade quickly. A written agreement can eliminate many of these problems.

2. Commitment . Reducing an agreement to writing often causes the parties to commit themselves to the agreement. Just seeing the terms in “black and white” can cause one to understand issues better than just hearing them. If a union steward or supervisor doubts what the correct grievance step is, showing them the contract language signed by both parties can quickly increase their commitment.

3. Contract . Putting the many individual agreements made on issues during negotiations into one written, signed, and dated document creates an enforceable agreement. The final document will be referred to daily as issues arise during the term of the new agreement and what was said at the table, intended, or even signed off on by both parties may not be remembered.

With a written, signed, and dated document in hand, the parties involved can feel confident their negotiating produced an agreement that achieves gains for both sides. In addition, they have a document that can be referred to by the many people involved in administering the agreement. A typical management policy is not to implement the new wage or other economic changes until the new agreement has been signed by both parties to avoid any possible disagreements.

The party who drafts the document should reflect the actual agreements made at the table, all of them. The nondrafting party should read the document carefully to verify that the language being used is clear and represents the understanding of the parties. This usually entails reviewing notes and signed provisions from the negotiations and making sure they and the written document are consistent. Finally, if “boilerplate” or standard contract terms have been included, even though those items were not actually discussed or agreed to, they should be reviewed to make sure these standard terms do not adversely affect the deal that was made. Often, the inclusion of such terms in the final agreement will cause the parties to discuss those details, which could help avoid problems in the future.

Summary

The core of collective bargaining guaranteed by the National Labor Relations Act is the actual negotiations of an agreement. Before they begin, negotiators for both management and labor should identify and weigh the critical elements of any negotiation: information, time, and power. The most important single piece of information in a negotiation is the BATNA or WATNA—best or worst alternative to a negotiated settlement. Understanding both one’s own and the other party may provide bargaining power in the negotiations. Negotiators should also understand that some actions that occur during bargaining might be considered unethical in another context, but are not always so considered in labor negotiations. Before negotiating critical economic issues, a negotiator often decides three critical values; opening offer, desired outcome, and reservation point (maximum or minimum acceptable value to guide their actions during bargaining.

Collective bargaining generally involves one of two strategic approaches: distributive or integrative. Factors to be considered when deciding which approach will work include the specific issues to be negotiated, the people involved, and the general context of the negotiations.

Distributive bargaining, in general, is a negotiation method in which two parties strive to divide a fixed pool of resources, such as money, each trying to maximize its share of the distribution. It is called a “fixed-pie” or “zero-sum” process because the other party loses the amount gained by one party. In distributive bargaining, the parties often view each other as adversaries, try to maximize their self-interest or grab a larger “share of the pie,” and are mostly concerned about the current negotiation, not future relationships. In collective bargaining the distributive strategy means that the parties seek to maximize their gain on each and every issue, and thus generally do not consider making logical trade-offs or finding possible compatible interests. If one side decides to only use the distributive approach, the other side usually has no choice but to also use distributive bargaining.

Integrative bargaining is a more cooperative approach to negotiation. It is often referred to as a “win-win,” “mutual-gains,” or “integrative” approach. The integrative approach, unlike distributive bargaining, involves seeking compatible issues by moving beyond stated positions or demands and instead discussing underlying interests to reach an agreement, and searching for mutually acceptable options and logical trade-offs. Negotiators generally strive to develop proposals that meet some interests of both sides because as Ted Kheel stated in the chapter-opening quote—unless both sides can receive something more than what the status quo provides, there is nothing for them to negotiate!

Case Studies Case Study 5-1 Good-Faith Negotiations

The Company owns and operates a nursing home for the elderly at its facility in Los Angeles, California. Jeoung Lee (J. Lee) is president of the Company. Although the Company is a corporation, witnesses spoke of J. Lee as the “owner.” The Company and the Union were parties to one collective bargaining agreement that expired on June 30. The Company and the Union conducted six negotiating sessions over the terms of a new agreement. The Union was represented by Estrada and the Company by Yokoyama and Jarvis, neither of whom had previously negotiated a collective bargaining agreement for the Company. According to Jarvis, prior to commencement of negotiations, J. Lee, who speaks broken English, met with him and Yokoyama. She told them to go to the negotiating meetings and bring back information. Yokoyama testified that his role was to represent J. Lee at negotiations, to give information requested by the Union during negotiations, and to collect any information or agreement and present it to J. Lee.

According to the Union, Jarvis told the negotiating group that Yokoyama had the authority to negotiate and that J. Lee had empowered Yokoyama with the authority to reach final agreement for the Company. The Union denied there was any discussion that a final agreement would need to be approved by J. Lee.

Yokoyama, testifying for the Company, said that Estrada asked at each negotiation session why J. Lee was not present, and they answered that she was extremely busy and could not attend but that J. Lee would be the final person to approve any contract.

The last negotiations lasted eight to nine hours and, with a federal mediator’s help, the parties reached a final agreement. The parties initialed a six-page document entitled “Tentative Agreement, Summary of the Agreement,” which included an appendix of wage rates effective July 1. According to the Union, the parties discussed the fact that the bargaining unit employees needed to vote on the provisions before the agreement could be considered final but there was no discussion about J. Lee or anyone else in management having to approve any agreement.

According to Yokoyama and Jarvis, after the parties reached a tentative agreement, the Union asked if the Company was going to sign the contract. Yokoyama told them that he could not sign the contract without J. Lee signing the contract, that she would be the final person to approve the contract. Yokoyama testified that he reminded the Union he would initial each point, but the final approval would have to be made by J. Lee and then the Union asked, “When is J. Lee going to look at this?” One union bargaining team member confirmed that the Company’s representatives said they would have to show J. Lee the agreement.

Yokoyama personally left the draft agreement in J. Lee’s office in her absence and also gave a copy to the payroll office, explaining that it was a tentative agreement. On July 1, the Company implemented the wage provisions set forth in the tentative agreement. In early August, upon her return from Korea, J. Lee told Yokoyama that she did not approve of the wage increases and that she wanted to change wages back to what they were prior to July 1. J. Lee then held a meeting with employees and told them that the increases were not part of the agreement, that the increase was too costly, and nobody had told her that they had signed a contract on her behalf. Without notifying the Union, the Company rescinded the wage increases.

The Union filed an unfair labor practice for refusing to sign the negotiated agreement and for not notifying the union that the wage increase was being rescinded. The Union pointed out that the duty to bargain carries an obligation to appoint a negotiator with genuine authority to carry on meaningful bargaining on key issues. And while an employer is not required to appoint an individual possessing final authority to enter into an agreement, the law is clear that an agent assigned to negotiate a collective bargaining agreement is clothed with apparent authority to bind the principal unless notice is given to the contrary. Therefore, if the agent does not have authority to bind his principal, notice of that must be clearly and unambiguously given. If an employer’s agent does not clearly communicate the existing condition precedent of his principal’s approval of any agreement, the refusal to sign the agreement is unlawful. The Union testified that Yokoyama and Jarvis repeatedly said they could negotiate on behalf of the Company. There was no “clear or unambiguous” notice that the agreement reached at the bargaining table would have to be approved by J. Lee. Therefore, refusing to sign the agreement was an unfair labor practice.

The Union also objected to J. Lee’s failure to notify the union that the wage increase was being rescinded. It is an unfair labor practice to change benefits without notice to the union and an opportunity to negotiate the change.

The Company responded on the bargaining in bad faith claim that if negotiators on the other side are apprised in advance of a requirement that any final and binding agreement is dependent on approval by the employer and that the agreement fashioned by the parties is only a tentative one, then either party has the right to reject it after presentation to its principal. So the issue in this case is what authority Yokoyama and/or Jarvis possessed to bind the Company by their negotiations and whether they conveyed to the Union that J. Lee’s approval was a condition precedent to any final and binding collective bargaining agreement. The Company further argued that in spite of the conflicting testimony as to what was said at the negotiation sessions, the circumstances of the negotiations support a conclusion that not only did Yokoyama communicate the necessity of preapproval by J. Lee but also that the Union understood that to be the case. Both Jarvis and Yokoyama were inexperienced in labor negotiations and therefore it was unlikely that they would be given carte blanche to bind the Company. The Union admitted that in responding to wage and benefit proposals, Yokoyama referred to J. Lee’s opinion on the subject and at one point, the Union negotiator demanded that J. Lee be present at negotiations. The persistent urging to have J. Lee present suggests that the Union was aware that J. Lee’s approval of contract terms was necessary. All the testimony agreed that the Company representatives only claimed the authority to “negotiate” or “bargain.” The authority to negotiate is not intrinsically equivalent to the authority to reach final agreement. Finally, the document initialed on the last day of negotiations specifically stated it to be a tentative agreement.

On the issue of an unfair labor practice for failing to notify the Union of the Company’s decision to rescind the wage increase, the Company argued that because the wage increase had not been agreed to and was simply an error, it was not a benefit. There is no requirement to meet with or negotiate with the Union on correcting a mere bookkeeping error.

Source: Adapted from JPH Management, 169 LRRM 1001 (NLRB 2001).

Questions

1. Do you believe the company was or was not bound to sign the agreement? Explain.

2. Explain why it might be an unfair labor practice for the company to rescind the pay raise without first meeting with the Union.

3. It is not an unfair labor practice for an employer to send negotiators to the bargaining table without the authority to give final approval to the negotiated terms, but is it a good or a bad idea? Explain.

Case Study 5-2 Selection of Bargaining Team Members

The Company is an information services company providing a wide range of services to other companies throughout the United States. One of the specific services the Company provides is a call-in employee assistance program by which employees of its clients may obtain advice and referrals related to financial and/or legal matters, substance abuse programs, and mental health assistance. The Company’s call-in center is staffed 24 hours a day, 7 days a week, and 365 days a year exclusively by the bargaining unit employees.

The Union and Company commenced negotiations toward a first collective bargaining agreement for the employees, and one of the first topics discussed was accounting for time spent by employee-members of the Union’s negotiating team attending negotiations. The Union requested that the six employee-members of its negotiating committee be allowed to take leave without pay to attend bargaining sessions, and the Union would compensate those members directly or reimburse the Company if the Company paid the employees through the payroll system. The Company, however, insisted that absences incurred by employees while attending contract negotiations be charged against the employees’ PDO (personal day off) accounts, in full-day segments, in the same manner as any other personal leave taken. The Company’s written leave policy provides for PDO as paid time off to be used for absences such as leisure, personal business, and short-term personal or family illness. PDO is accrued based on length of company service and is operated on a “no fault” type arrangement where employees can take PDO for any or no reason. The Company also has a “Personal Leave of Absence Policy,” the stated intent of which is to recognize reasonable requests for unpaid leave providing the requests will not impact normal business operations. Otherwise, the Company does not give unpaid time off for personal reasons under any circumstances and would not treat employee negotiators any differently. The Company explained that because of scheduling concerns regarding the call-in center, it was unwilling to permit employees on the negotiating committee to simply take unpaid leave in lieu of PDO, and that the efficient operation of its call-in center depended, for the most part, on dependable staffing.

The Union continued to seek to have its employee negotiators be permitted to take leave without pay for time spent participating in negotiations. The Union also proposed meeting outside normal work times, but the Company refused to set any night or weekend bargaining times. The Union argues it is the Company’s position that it would be unreasonable to ask its managers to devote their nights and weekends to negotiations. The Union notes the Company had three valid options it could have taken consistent with applicable case law, namely: (1) it could have paid employee-negotiators to attend negotiations with no loss of PDO; (2) it could have granted unpaid leave to employee-negotiators to attend bargaining; or (3) it could have agreed to meet after hours for negotiations.

The Union charged the Company with an unfair labor practice for refusing to meet with the union representatives outside working hours and by simultaneously refusing to allow members of the bargaining committee leave without pay to participate in negotiations.

The Union argues that the Company has unlawfully interfered in the selection of Union’s bargaining representatives by only bargaining during the working day and forbidding employees from taking unpaid time to participate in negotiations. According to the Union, the Company advanced no extraordinary circumstances to support its insistence on charging employees PDO, nor for its unreasonable refusal to meet after hours for negotiations. The Union argues that the absence of the six (or less) employee-negotiators from work to attend bargaining did and will not unduly disrupt the Company’s scheduling because the employee-negotiators involved come from different work groups in a workforce of approximately 130. The Union asserts meeting on weekends could have eliminated this concern of the Company altogether. Furthermore, the Company’s reliance on its past practice with respect to its PDO policy is invalid because there has never been a union at the Company prior to this time, so there could not have been any past practice with regard to the type of leave that would be appropriate to cover employee absences for the purpose of participating in collective bargaining.

The Company contends it has consistently applied its PDO policy in a lawful manner when dealing with employee absences from work including its requirement that employee-members of the Union’s negotiating committee be charged PDO for the time they spend at negotiations. The Company points out that because employers are not required to pay employees for time spent attending negotiations, there is no meaningful distinction between that and its practice of paying its employees for time spent at negotiations but then deducting PDO for such time. The Company further notes that an employer is free to insist that negotiations take place during business or evening hours so long as it does not interfere with a union’s ability to designate its employee negotiating representatives. The Company argues it has in no way interfered with the Union’s right to designate its representatives by application of its PDO policy to the employee-members of the Union’s negotiating committee. The Company strongly asserts it has never, by any of its actions, attempted to dictate or control which employees the Union chooses to bring to the bargaining table. The Company notes it has agreed to grant negotiating representatives of employees as much leave with pay as needed to attend negotiations, but that it merely requires the leave be charged against the employee representative’s PDO account in the same manner that other employee nonbusiness time off from work is charged. In addition, the Company has placed no limitations on the ability of employee representatives to trade shifts with coworkers to attend contract negotiations.

The Company agrees that if an employer insists on bargaining during working hours it cannot simultaneously refuse employees time off to attend negotiations; however an employer is not required to grant unpaid time off to avoid violating the act. The Company has never denied any employee-member of the Union’s bargaining committee time off for negotiations.

The Company contends the Union’s allegation that it has refused to meet at times when employee-members of the Union’s bargaining committee are not scheduled to work is false as a factual matter. The bargaining committee consists of employees who work all three shifts at the Company; thus, there is no time during which all of the Union’s employee representatives are available to attend negotiations during nonworking times. And the Company argues charging PDO for negotiations is necessary to ensure staffing levels remain predictable and not create unnecessary staffing problems for the Company.

Source: Adapted from Ceridian Corp. and Service Employees International Union Local 113, 343 NLRB No. 70 (2004).

Questions

1. Do you think that the Company’s insistence on treating the employee-members of the bargaining team the same as all other employees requesting unpaid time off was just a bargaining tactic? Explain.

2. Explain how using the categorization method of integrative bargaining might have helped these parties in their negotiations.

3. Identify the “positions” and “interests” of both parties on the use of PDO for employee- members of the bargaining team attending negotiations.

 You be the Arbitrator Negotiations

CBA Article XXXIV,  Section 2

Should either party desire to discontinue or modify the existing agreement upon any termination date, at least thirty (30) days prior written notice of such intent must be given to the other party hereto. In the event of notice of cancellation or modification of the agreements, it shall be the duty of the parties to meet in conference not less than ten(10) days prior to the expiration date of said agreement for the purpose of negotiating new or modified agreements.

It is further agreed that proposed changes or new agreements shall be presented not later than the first day of the conference by the party serving notice.

Facts

The parties were signatories to a collective bargaining agreement ending June 15, 2009. Faced with labor costs $10 an hour over its major competitors in the flat glass market, the Company wished to modify the collective bargaining agreement and engage in concessionary bargaining. The Company sent a letter, dated April 22, 2009, to the Union stating that the Company intended to open negotiations for the existing labor agreement and suggested that the parties begin negotiations on June 1, 2009. At approximately the same time as the letter was sent, the Company’s chief negotiator telephoned the Union’s chief negotiator and requested a meeting. The meeting took place on May 14, 2009. Two Company officials accompanied the Company’s negotiator; the Union’s negotiator was the sole Union representative. The Company’s negotiator stated the purpose for the meeting was to update the Union regarding the economic state of the Company’s plant. He explained that the Company’s competitors had labor costs of $22 and $26, while the Company carried labor costs of $37. He explained that labor costs had to be brought below $27 if the Company was to remain viable. He referenced negotiations concluded at a sister plant in Fresno, California, where a two-tiered wage system had been introduced. The Company’s negotiator indicated that the Company intended to introduce at the upcoming negotiations the two-tiered wage system and that they hoped to buyout some current employees and that new hires would be placed on the second [lower] tier of the two-tier system.

At the meeting, the Union negotiator requested that the Fresno settlement be given to him and that the Company provide “blended” labor costs for the proposed two-tiered wage system. The Company provided the Union with the information requested.

Negotiations between the parties began on June 1, 2009. The Company negotiator made an opening statement in which he stressed the flat glass market was depressed, that the Company’s competitive advantages had eroded, and that the Company needed to get labor costs down to $27. He also stressed the need for the Company to obtain a two-tier wage system. Thereafter, he announced that he was prepared to present “noneconomic” proposals. Those proposals also indicated a reference to a revised two-tier wage system and overtime. The explanation of the proposals consumed the bulk of the day and the session effectively ended at 4:00 p.m. At that point, the Company’s negotiator indicated that he may have one more noneconomic proposal. When asked what time the proposal would be ready, he replied that he could be ready at approximately 4:30 p.m. The Union did not wait to hear the proposal. There were no Union bargaining proposals made on June 1, 2009.

The parties met the next day, June 2, 2009, at which time the Union agreed to the noneconomic proposals offered by the Company the day before. However, the Union negotiator indicated that pursuant to Article XXXIV of the current contract, the Union was not obligated to bargain regarding proposals which followed the first day of bargaining, that is, June 1, 2009. The Company negotiator disagreed and presented the economic proposals that included a two-tier wage system. When the Union refused to bargain, the Company took the issue to arbitration.

Position of the Parties

The Union argued that Article XXXIV,  Section 7 , is clear and unambiguous. The provision mandates that a party serving notice of its desire to modify the contract must provide the other side with its specific proposed modifications to the contract by the end of the first day of formal bargaining. It was further argued by the Union that the term “proposed changes” unambiguously refers to specific proposed modifications to the contract. A proposed change means an offer by one person to another of terms and conditions with respect to some work or undertaking and the acceptance thereof will make a contract between them. The wording of Article XXXIV,  Section 7 , clearly requires the party serving notice of its desire to modify or terminate the agreement “shall present” its proposed changes. The word “shall” is a mandatory one and does not give the moving party in negotiations leave to delay the presentation of its proposals. The Company presented its specific noneconomic proposals on June 1, 2009, but failed to present any specific economic proposals until the second and third days of bargaining. The overviews of thoughts regarding negotiations during the May 14, 2009, preliminary meeting, and the opening statement on June 1st were not sufficiently specific or sufficiently tied to the language of the agreement to meet the requirement of Article XXXIV.

The Company argued that the unmistakable intent of Article XXXIV,  Section 7 , was to preclude late introduction of new bargaining topics. It points out that the language in question requires the party wishing to amend the agreement to provide 30 days’ notice to the other side and directs that the parties “shall . . . meet in conference” at least ten days before the contract’s expiration in order to negotiate changes or a new agreement. The Union’s position focuses on the next sentence which states that the party giving notice shall present “proposed changes or new agreements . . . not later than the first day of conference.” The Company asserts that these words do not require that proposed changes or new agreements either be in writing or be presented with a parti-cular level of specificity. It maintains the word “conference” to mean formal table bargaining. As the language refers to presenting proposed changes or agreements “not later than the first day of conference,” it clearly contemplates that presentation may be made before the first day of conference. Because the Company informed the Union’s chief negotiator on May 14 and at the beginning of June 1 negotiating session that it would be proposing to reduce its labor costs from $37 to $27 per hour and that it would need a two-tier wage system that would apply to new hires to do that, the Union could not say that it was surprised regarding the Company’s economic proposals.

Questions

1. As arbitrator, what would be your award and opinion in this arbitration?

2. Identify the key, relevant section(s), phrases or words of the collective bargaining agreement (CBA), and explain why they were critical in making your decision.

3. What actions might the employer and/or the union have taken to avoid this conflict?

Source: PPG Industries, Mt. Zion, Illinois and United Steelworkers of America Local 193-G, 127 LA 174 (2009).

Chapter 6 Negotiating a Collective Bargaining Agreement

In July 2010 Chicago area union construction workers staged a three-week strike which in the end gained them a 9.75 percent increase in wages and benefits over three years.

Source: © Chicago Tribune Company.

Somebody must be boss; somebody has to run the plant!

Arthur Goldberg (U.S. Supreme Court Justice)

Chapter Outline

1. 6.1. The Bargaining Process

2. 6.2. Preparation Stage

3. 6.3. Bargaining Stage

4. 6.4. Pressure Bargaining: Possible Strikes

5. 6.5. Reaching Impasse

6. 6.6. Resolution Stage: Beyond Impasse

7. 6.7. Reducing an Agreement to Writing

8. 6.8. Key Provisions of a CBA

9. 6.9. Bargaining in the Public Sector

Labor News Chicago Construction Strike Idles Hundreds of Projects

On July 2, 2010, just before the Fourth of July weekend, the Chicago Laborers District Council and Local 150 of the International Union of Operating Engineers walked off hundreds of construction sites in the Chicago, Illinois, area. For three weeks the projects remained idle as negotiators failed to agree to a new contract. The prior contract had expired weeks earlier. The core issues were wages and health care. When the strike began, the unions were asking for a 15 percent increase over three years, and the contractors offered a 1 percent increase. After three weeks the strikers appeared to achieve their goal when the negotiators agreed to a 9.75 percent increase in wages and health care benefits over three years—a far greater gain than many workers had realized during the Great Recession which caused record unemployment and wage freezes.

Central to the collective bargaining process are the actual negotiations carried out by the parties to reach an agreement. Artful use of this process can improve the relationship between an employer and the employees and result in a useful agreement for both parties. Unsuccessful negotiations can possibly lead to work stoppages and a loss of profits, wages, and benefits. This chapter examines details of the collective bargaining process and potential solutions to a bargaining impasse.

The bargaining process usually begins when a contract has reached the end of its term or one party wants to terminate or amend an existing contract. Most agreements provide for the automatic extension of an existing contract past the expiration date, usually for one year. Either party may initiate new negotiations by providing written explicit notice to the other party. A clause specifying automatic renewal and the process to begin new negotiations is included in 90 percent of labor agreements. 1

Today even amicable union–management relationships often need to take a new approach to the negotiation process. Both sides are faced with difficult and complex issues that require greater preparation, professional analysts, and flexibility to create mutually acceptable solutions. These external factors may include economic pressure from international, lower-cost competition, soaring health care costs, and expensive retirement plans. Successful negotiators must think less about “beating the other side” and more about developing proposals that meet the needs of both sides. While some issues can be resolved by using trade-offs, other issues, especially more costly and complex ones, cannot and instead must be resolved by a problem-solving method. 2

The Bargaining Process

The collective bargaining process begins long before the parties meet across the bargaining table. As discussed in  Chapter 4 , the organization of units and the selection of the bargaining agent or union is a lengthy process necessary in determining the parties to a collective bargaining relationship.

The People Who Bargain

Union Representatives

Although there are as many types of negotiators as there are negotiations, some generalizations can be made. National agreements require large negotiating teams, with members from several union offices, staff, and locals. The majority of negotiations take place at the local level—either after a national agreement decides certain issues or because no national agreement exists.

A local union’s negotiating team is made up of certain ex officio members, such as the president or one or more elected officers of the local union, a chief steward or grievance committee

Negotiations for new contracts covering 1,400 staff workers began in August 2011 between the University of Rochester Hospital and Service Employees International Union, Local 1199.

Source: Ted Warren/AP Images.

member, and several union members representing various departments or job classifications. In most negotiations involving craft unions, the business agent is part of the negotiating team and often the chief negotiator. For industrial unions, an international union representative who is a professional negotiator is often available to guide and counsel local union officials.

Although international representatives have no official status during local negotiations, their experience often puts them in a leadership role. They give guidance on the grievance process and set the tone for negotiations and, in the case of impasse, for pressure tactics. They play the role of mediator or assume a militant stand to allow the local representatives to appear reasonable.

The authority of the union’s negotiating team, however it is formed, is somewhat limited by the membership. The union members usually delegate only provisional and temporary authority to the negotiating team to make a settlement. In most situations, any final tentative settlement must be presented to the total membership for a vote.

Management Representatives

The negotiation authority of the management negotiating team is derived directly from top management—the president, CEO, mayor, principal, and so on. In negotiations involving a single employer, representatives may include the labor relations director, human resources director, financial officer, production/operations manager, and a labor lawyer, as well as top managers. When a multiemployer association is involved, the management often employs a labor relations adviser and negotiator who is equivalent to the international representative. This professional serves a role similar to that of the union counterpart by promoting the multiemployer organization, by preparing management counterproposals, and by conducting negotiations.

Negotiating Skills

Successful negotiations depend on the knowledge and skill of the negotiators. They must, through careful preparations, become knowledgeable about their own and the other side’s interests in the bargaining issues. They prepare and propose workable, attainable, and realistic proposals within the framework of the negotiations. To use the acquired knowledge wisely, a negotiator must develop an understanding of the opposition. Listening skills and the ability to communicate clearly are two cultivated techniques. A thick skin also may be helpful because the other side may engage in personal attacks at some point in the negotiations. A negotiator realizes that such attacks may only be necessary to satisfy a constituency—showing the members their negotiators are hard-nosed negotiators!

Former United Auto Workers (UAW) (from left), Vice Presidents Nate Gooden, Gerald Bantom, and Richard Shoemaker, President Ron Gettelfinger, and Secretary-Treasurer Elizabeth Bunn are shown at the negotiating table at Ford World Headquarters.

Source: Carlos Osorio/AP Images.

Preparation STAGE

Many unions affiliate with larger international unions. If a master agreement is negotiated by the international, then the international controls all but local concerns. Preparation for negotiations on a master agreement is virtually nonstop, and time consuming. Preparation for contract negotiation on a local level, although not as intense, is still extensive.

The first stage, preparation, involves analysis and planning. In analysis, information is gathered, and the potential bargaining issues are selected, followed by a process of narrowing the list of issues to a manageable size. Planning forces the parties to evaluate and set priorities and to make realistic decisions about their demands. The parties’ attention is focused on achievable goals. The parties are then ready for the second stage, the bargaining stage, which leads to the final stage, resolution (see  Figure 6-1 ).

Categories of Bargaining Subjects

It is a function of law and common practice to decide what items to include in the collective bargaining session. The National Labor Relations Act provides that bargaining will include rates of pay, wages, hours of employment, and conditions of employment. 3  Under enforcement of the unfair labor practice charge of refusal to bargain, the National Labor Relations Board (NLRB) determines which subjects fall under the law. The board and later the courts recognized three categories of bargaining subjects: those that will be discussed, those that might be discussed, and those that cannot be discussed.

In the early years of the act, the board based its decisions on what constituted bargaining subjects by evaluating the history of the agreements. However, to protect unions and the collective bargaining process in its formative stage, the board found the discussion of union recognition clauses compulsory. Hence, union shops, dues check-offs, and the treatment of employees after a strike became part of the collective bargaining discussion.

In a case-by-case method, the board began to establish the list of subjects to be covered. In 1958, the Supreme Court decided the  Borg-Warner  case, which distinguished between the treatment accorded subjects determined by the board to be mandatory, and the treatment accorded

Figure 6-1

The Three Stages of the Bargaining Process

subjects determined to be permissive, and those subjects determined to be illegal. The Court noted that although the attitude of the parties is important in determining the good faith required by the act, the issues being discussed are also important. 4  It became a legal question of whether a proposal was one the parties were obliged to discuss. The U.S. Supreme Court identified two criteria for the NLRB to use in determining if an issue is a mandatory subject: 5

1. Whether the issue is “plainly germane” to the “working environment” and

2. Whether the issue is “not among those ‘managerial decisions which lie at the core of entrepreneurial control.’ ”

For example, in 2004, in the Anheuser-Busch case, the NLRB found that the employers use of hidden surveillance cameras in work and break areas, which led to employees receiving

Tips from the Experts

Union

What are the three most important things for a union to do to prepare for negotiating a collective bargaining agreement?

1. Its homework as far as defending its own proposals

2. Its homework as far as anticipating management’s proposals

3. Its homework as far as the politics of the negotiations: its own negotiating team as well as management’s

You can never be overprepared for negotiations. Whether it is an art or a science, effective negotiation takes tremendous understanding of the substantive issues, a lot of creativity, and thoroughness as well as keen understanding of people and power. Successful negotiations require looking beyond what is in place to what is possible to achieve a result that gives everyone what they need in a way that they can say “yes.”

Management

What are the three most important things an employer must do in preparing for negotiations?

1. Select a spokesperson both for the team and for public statements: someone familiar with labor law as well as the company/industry/labor relations issues and someone who has the respect of both the union and management teams (whether in-house or an outside counsel or consultant).

2. Establish specific goals and directions, including “drop-dead” points.

3. Gather input from line management in terms of what is or is not working in current collective bargaining agreement (or practice, if this is the first collective bargaining agreement to be negotiated) and from budget personnel as to cost of changes and impact of same.

discipline for misconduct, was a mandatory subject because the use of cameras does affect employees’ work environment—their right to privacy—and is not a core managerial right. 6  When the NLRB determined that the use of video surveillance cameras is a mandatory subject, it reasoned that their use is similar to the use of medical examinations and drug testing: They are all investigatory employer tools primarily used to find evidence of employee misconduct. Arbitrators, in deciding surveillance cases, have generally sought to balance the employer’s legitimate need to control misconduct with employees’ privacy interests. 7

If the subject is  mandatory  , a party may insist on its inclusion, and the other party cannot refuse to discuss it. Although compelled to bargain in good faith, neither party is legally obligated to compromise its stated position on a mandatory subject, and each party may even push the bargaining situation to an impasse. A legal impasse in negotiations can occur only when the parties cannot agree on a mandatory issue. The employer can, if there is a bona fide impasse, unilaterally implement its final offer to the union. If any permissive issues are also unresolved at the time of impasse, they can be implemented with the mandatory issue. 8

Mandatory items

The items that must be bargained in good faith, if either party so requests, such as wages, hours, and benefits, based upon the Borg-Warner case that outlined categories of bargaining subjects.

Subjects deemed mandatory by the NLRB include those issues actually listed in the act: rates of pay, wages, hours of employment, and other conditions of employment. Also included are issues the NLRB considers related to the subjects listed in the act. After the Borg-Warner decision, the Supreme Court refined the definition of mandatory bargaining subjects to include subjects that “vitally affect” employees. 9  In recent years, several issues critical to unions, such as liquidation of a business, partial plant closings, subcontracting work, and plant relocations have been litigated to determine whether they are mandatory or permissive subjects of bargaining.

After some confusion that was generated by board decisions during Ronald Reagan’s presidency, board rulings listed subcontracting and plant relocations in the mandatory list if such are a means to substitute other workers for the bargaining unit members. Partial plant closings or other “going-out-of-business” decisions are not subjects of mandatory bargaining because there is no intention to replace the bargaining unit members. 10   Table 6-1  delineates mandatory, permissive, and illegal subjects. The NLRB continues to add new issues to the lists of subjects as they become important. For example, employee drug testing was not an issue on any of the three lists until the 1980s when the subject came to the forefront.

Concessions are seldom made regarding permissive subjects because the parties cannot bargain to an impasse over them. 11  Designating plant closings and other business issues that

Table 6-1

Bargaining Items

Source: Based on information from Patrick Hardin, John E. Higgins, Christopher T. Hexter, and John T. Neighbors, The Developing Labor Law, 4th ed. (Washington, DC: Bureau of National Affairs, 2001).

focus on the economic profitability of a business as permissive 12  has had a profound impact on unions’ ability to win concessions on such issues at the negotiating table or to alter major decisions affecting union security.

Wages

The board has defined wages as “direct and immediate economic benefits, flowing from the employment relationship.” 13  Included in the discussion of wages are hourly pay rates, overtime pay, piece rates, incentive plans, shift differentials, paid holidays and vacations, and severance pay. Other forms of compensation are also included by the NLRB under the wage category and are therefore considered mandatory; they include the following:

1. Pensions and insurance benefits. Whereas employers considered pensions and insurance benefits as separate from wages, the NLRB considered them as payment for services rendered and found an inseparable nexus between employees’ current compensation and future benefits. However, retirement and pension plans are mandatory subjects for active employees only and not for retired members.

2. Profit-sharing plans. Profit-sharing plans are also considered as payment and enhancement of economic benefit. Such plans are usually structured to increase benefits to employees when company profits go up.

3. Christmas and other bonuses. A onetime or performance bonus may be a mandatory subject. The board has devised a test to determine whether such a bonus is a gift or part of the employees’ compensation. Generally if the bonus has been given intermittently over the years, is not tied to salary, is not uniform, and depends on the employer’s financial condition, it is a gift, and not a mandatory issue.

4. Stock purchase plans. Employers contend that stock purchase plans are not employee benefits but simply an incentive for the employee to invest in the company. The NLRB rejects that argument and deems such plans a form of compensation that is a mandatory subject for collective bargaining.

5. Merit wage incentives. A company may consider merit increases management’s prerogative, but the NLRB has said that because merit raises involve the formation and application of standards affecting all wages, they must be considered a mandatory bargaining subject.

6. Company housing, meals, and discounts. The inclusion of these in the list of mandatory subjects depends on the situation. Such items would be mandatory if the job required living or eating on company-owned premises.

Provisions detailing hours, daily and weekly work schedules, and requirements for overtime premiums are found in virtually all contracts. 14  Specific start and stop times, lunch and rest periods, and other scheduling rules are usually included. Although scheduling work is normally a management prerogative, any change from the hours specified in the contract, no matter how minimal, is considered an unfair labor practice, even if it does not affect the employee’s pay.

Conditions of Employment

The board has stated that the phrase “conditions of employment” refers to terms under which employment status is given or withdrawn, rather than physical working conditions. Conditions must have a material and significant impact directly affecting the employment relationship. Four major areas include the following:

1. Employment security. This covers all aspects of hiring and firing and granting tenure. Hiring and probationary periods, seniority, job-bidding procedures, promotions, and transfers must all be bargained, except for the nondiscriminatory promotion of employees to supervisory positions. The order and manner of layoffs and recalls, issues surrounding the discharge and retirement of employees, and contracting out work normally performed by members of the bargaining unit are also mandatory. In some instances, plant closings and relocations must be bargained. Although courts have said that a company is not required to negotiate an economically motivated decision to close or relocate a plant, the effects of such an action must be bargained.

2. Job performance. The day-to-day relationship between employer and employee is a mandatory subject of bargaining and includes absenteeism, work breaks, lunch periods, discipline, and dress codes. Although safety practices must be discussed, management may still have the final say. Decisions concerning workloads and the number of employees necessary for a task are considered mandatory, and under recent board and court decisions, drug testing of employees is considered a mandatory bargaining subject, although the decision to test job applicants is not. 15

3. Union security .

union security

The provisions of collective bargaining agreements that directly protect and benefit the labor organization (union), such as dues checkoff and union shops.

The protection of the union’s representation status is a mandatory subject for bargaining. Such protection requires a 30-day grace period before an employee must join the union, discontinuance of a union shop according to majority vote, and a prohibition against discharge of an employee for nonmembership in a union for any reason other than failure to pay dues.

4. Management–union relationships. All principles governing the discharge of collective bargaining duties and enforcement of collective bargaining agreements, including grievance and arbitration procedures, are considered mandatory.

If the subject is permissive, a party must withdraw it from bargaining if the other party does not voluntarily agree to its inclusion in the discussion. Both parties must agree for permissive subjects to be bargained. Examples of permissive subjects include performance or indemnity bonds, which protect the employer from liabilities in the quality of the union’s work, and management’s right to have an impact on the internal affairs of the union.

Permissive items

Those items not related to wages, benefits, working conditions, or other mandatory subjects that may be negotiated in collective bargaining if both parties agree; If one party refuses to negotiate a permissive item, the other party cannot claim bad-faith bargaining or declare an impasse in negotiations over the item.

Subjects deemed illegal by the act or the NLRB may not be proposed for discussion and, even if agreed to by both parties, would not be enforced by any court. These include violations of public policy, otherwise unlawful issues, and items inconsistent with the principles of the National Labor Relations Act. A closed shop requiring union membership before an employee is hired, racial separation of employees, and discrimination against nonunion members are illegal bargaining subjects.

If in the future a portion of the contract becomes illegal under a state or federal law, the  severability clause  in the contract becomes effective. A severability clause allows for the terms of the contract to be independent of one another, so that if a term in the contract is deemed unenforceable by a court, the contract as a whole will not be deemed unenforceable. If there were no severability clause in a contract, a whole contract could be deemed unenforceable because of one unenforceable provision. Severability clauses appear in 68 percent of all contracts. About half provide that the offending section is null and void; the other half call for renegotiation of the issue. 16

Severability clause

A contract clause stating that any portion of a contract declared invalid by state or federal law shall be declared null and void while still holding the remainder of the contract valid.

Sources of Bargaining Issues

In general, it is the union that introduces most of the issues to be discussed at a collective bargaining session, and management reacts to such proposals. Management can and usually does, however, initiate some issues for negotiation.

Union negotiation teams solicit member input in formulating demands. This solicitation can be done at general union meetings, at meetings with union stewards, or through written or electronic questionnaires. Some bargaining items are formulated through analysis of the types of grievances filed and from recent arbitration awards. Problems detected at a lower level are passed on to be included in the collective bargaining talks. Management often adds line supervisors’ suggestions on workforce rules and operations to its economic positions during negotiations.

Both union and management can also look to external sources for bargaining items. Recent contracts within the same industry or region can give both parties ideas on realistic, attainable proposals. Often the overall economic condition of the nation and that of the particular industry limit or expand bargaining demands.

In addition to general sources, each party is entitled to certain types of information from the other. Under the duty to bargain in good faith, a union may demand relevant information from the employer in preparing wage demands.

Planning may be the most critical element in successful negotiations. In general, negotiators plan effectively in the following ways:

1. Anticipation. Each side, through research and members’ input, must correctly assess those issues critical to both sides. The general mood greatly affects the early stages of negotiations. The key issues for each side and the possibility of a strike or other actions should be anticipated and a response prepared. A response, such as a detailed counterproposal or a package of several items, can center the conflict on the issues rather than personal emotions.

2. Realistic objectives. Preparation on all items of interest can help avoid costly mistakes during heated and lengthy negotiations. Negotiators should prioritize all objectives and develop a settlement range. Logical trade-offs among items of interest can be analyzed and prepared.

3. Strategy. Each party must evaluate the opponent’s current needs as well as its own, review the bargaining history between the two parties, and prepare an overall strategy for negotiations. Important aspects to consider include personalities of negotiators, current financial and political position of each party, and outside influences, such as the economy, product sales, and public support of unions. Strategy formulation helps both sides develop realistic expectations of how negotiations will proceed and what the final agreement will be. For example, senior union employees may be most unhappy with the current pension program, but a significant increase in the pension formula would require costly increases for all future retirees. Thus, in developing its strategy, management could develop an economic package including alternative combinations of onetime lucrative early retirement options with pay increases loaded toward younger employees.

4. Agenda. Both parties should develop an agenda for discussing all items in a logical manner and incorporate it into the written ground rules. For example, after settling problems with the current contract’s wording (which may have arisen through grievance), negotiators can exchange noneconomic proposals and settle as many as possible. They should follow this settlement with an exchange of economic proposals dealing with smaller-cost items first, keeping on the table the highest priority economic and noneconomic items.

Expectations must be established at the same time priorities are set. Successful collective bargaining may be impossible if the highest priority of one party is an item the other party is unlikely to negotiate.

To establish realistic objectives, the party considers patterns and trends in contract settlements of other employers in the industry and the local community. In an economy where a 2 percent cost-of-living raise is almost universal, a request for 8 percent would be unrealistic. The parties also examine their current and past bargaining relationship along with their relative strength. For example, if contract negotiations have already been concluded with other employers in the same industry and this employer in the past followed that pattern, it may be unrealistic to expect major deviations.

Bargaining stage

As identified in  Figure 6-1 , the second phase of the negotiation process may be called the “bargaining stage” when the union and management negotiating teams sit down at the table to negotiate a collective bargaining agreement. Based on the particular needs and interests of the parties, both sides come to the table with a list of issues, concerns, demands, and often complaints. In the first session the members of both negotiating teams are introduced, and both chief negotiators usually make opening statements. In addition, ground rules for the negotiation that provide a framework of the “who, when, where” of the negotiation sessions are usually discussed and agreed upon. If the parties have a long-standing relationship, establishing procedures can be very routine. But when the collective bargaining process is relatively new or when the parties have had bad labor relations, setting procedures can be as difficult, and as important, as bargaining on the issues.

In one of the first sessions both sides usually, in accordance with their ground rules, exchange a list of all the mandatory and permissive (although not so identified) issues they wish to negotiate or “put on the table” in future sessions. These issues are often divided into two lists: economic issues (wages, health insurance, pension, paid time off, etc.,) and noneconomic (grievance process, seniority, work rules, etc.) issues. Then the heart of the collective bargaining process takes place: the exchange of proposals and counterproposals over a period of weeks, months, and sometimes even years. The different strategies, tactics, and techniques commonly used in the bargaining stage are discussed in detail in  Chapter 5 .

PRESSURE BARGAINING: POSSIBLE STRIKES

An understanding of the use of perceived leverage, or pressure bargaining, during labor negotiations is necessary in any study of collective bargaining. Often the final settlement in the collective bargaining process is greatly affected by the relative bargaining power of each party. Simply stated, if it costs more to disagree than to agree, the party will agree. It is therefore an objective during collective bargaining to determine the costs of putting on or responding to an economic strike.

The ultimate test of strength in the negotiating process is the union’s ability to strike and the company’s ability to take a strike. Before such action is undertaken, or even seriously planned, both sides carefully estimate the external factors that may influence the balance of power, and therefore the success of a strike or other action such as management hiring permanent replacement workers if the union declares a strike. For example, in 1996 when the UAW and the “Big 3” U.S. automobile manufacturers began negotiations, the economy was strong, and the companies were making record profits and wanted to avoid even one day of lost production—the result was significant wage increases and job security. About 11 years later, however, the balance of power was reversed and the “Big 3” were losing millions of dollars, had excess capacity, and needed to gain concessions just to remain in business. The result was record wage and benefit concessions by the UAW. The external economic factors had changed 180 degrees in only 11 years, and had completely shifted the balance of power—and thus greatly affected the outcome!

REACHING IMPASSE

Strikes

No matter what method of negotiations is followed, the parties at some point reach an agreement or face an impasse (a stalemate). There are many reasons why negotiations could result in an impasse. The most obvious is that the interests of the two parties have not been reconciled. Another reason is that one party has no real intention of settling. Their overall strategy might include going to an impasse to show how inflexible the other party is. Also, during pressure bargaining, a strategic impasse may appear necessary to move the two parties closer together, and a genuine impasse results simply by miscalculating how close the parties really are.

Usually, the employees initiate economic pressures during negotiations because the union’s goal in contract negotiations is to increase benefits, whereas management’s goal is to maintain the status quo or gain concessions. In the private sector, the threat of a  strike  by the union employees is the union’s most effective means of showing power, putting pressure on management, and possibly realizing gains at the bargaining table if successful. In the public sector, strikes are usually unlawful, although they still occur on occasion. A strike, however, may be called and endured for reasons other than a genuine inability to reach an agreement. One party may merely have miscalculated the breaking point of the opposition and increased a demand or refused a request once too often. Errors in strategy or in the interpersonal relations of the negotiator could preclude an opportunity for compromise. Management may want to liquidate surplus inventory while production is stopped by a strike. Union leaders may want to consolidate workers’ support for their leadership, proving that a future strike threat has to be respected. Union leaders may feel the need for union solidarity that can be fostered only by a picket line. Often a strike is needed to vent member frustration over an inevitable but unsatisfactory contract settlement. 17  On occasion an impasse may result after the negotiation teams have reached a tentative settlement and union membership rejects the contract. Such rejection may stem from a misjudgment of membership wishes by union officials or an inability to sell the agreement.

Strike

A work stoppage by a number of employees caused by a disagreement with management over certain issues such as contract negotiations, grievances, or unfair labor practices.

Calling a Strike

The right to strike is one of the rights made available to employees expressly provided by the National Labor Relations Act. It “lies at the core” of the congressional intent to promote collective bargaining in the private sector. 18  Usually, but not always, in the public sector employees are banned from striking by law. Whatever the reason for an impasse, a decision to strike is not made lightly. In many instances the union negotiating team has asked members to support a strike vote early in the negotiating process to prove its bargaining power when it becomes necessary to apply pressure. Although such a vote strengthens the negotiator’s position, it needs to be carefully worked so that a strike deadline is not imposed, thereby tying the negotiator’s hands. Slow-moving negotiations could become deadlocked; the deadline could destroy the negotiating atmosphere.

“Nobody wins in a strike, but there comes a point in time when somebody can push you off a cliff,” said United Auto Workers former president Ron Gettelfinger. Gettelfinger and his negotiating team representing 73,000 members called for a strike against General Motors in September 2007, demanding job security and health care assurances. 19  A union must weigh the cost of a strike against the probable benefit. A strike means loss of wages when wages may be quite high after years of successful union negotiations. Strike benefits can also be a drain on union funds. Workers risk losing their jobs, and even if they return to work, a strike can damage or destroy a good relationship with the employer. In addition, a union risks the loss of public sympathy. The success or failure of previous strikes and the availability of other jobs must also be considered. In addition to lost wages, union members today are also almost equally concerned about lost health insurance during a strike, which can leave their family without health care coverage. For example, Smart Papers LLC, a Hamilton, Ohio, company, refused to extend health care benefits to striking workers as a means of putting added pressure on them to return to the table. The company also did not extend COBRA health care benefits and began advertising for replacement workers. 20  Today, union leaders are far less likely to call a strike than in past years. In fact, the Bureau of Labor Statistics reports that in 2009, the number of major U.S. strikes (1,000 or more employees) fell to 5, the fewest since 1947, when it began recording strike data, and far less than the 424 in 1974, the modern record (see  Figure 6-2 ). The number of major U.S. strikes has remained remarkably low in recent years. The loss of wages and potential permanent loss of their jobs are reasons why fewer union members and leaders are willing to call for a strike. Employers have demonstrated their willingness to hire and train replacement workers to defeat a strike. Finding qualified replacement workers just is not as difficult as in past years. However, today both sides realize that a strike isn’t in either’s best interest. 21

Management Response

The majority of strikes in the private sector occur when the existing contract expires; then employers have ample notice to prepare a strike plan. However, many

Figure 6-2

Number of Major Strikes (Involving 1,000 or More Workers)

wait until negotiations begin to break down, which is too late. A strike plan often focuses on how the employer will shut down operation during the strike, continue to operate with only management personnel, or hire replacement workers. Strikers may not be fired during a strike, but they can be replaced with permanent replacement workers.

Employers may not lawfully discharge a striking worker until they have hired a replacement worker to fill the position. In one case, supervisors telephoned bargaining unit employees to see which would be striking. The employees were told that if they did strike, replacements had been hired. A federal appeals court upheld the company’s actions when the union filed an unfair labor practices charge because contract negotiations were underway. 22

Both sides should keep in mind the possibility of an eventual settlement calling for the recall of striking workers, even after replacements have been hired, and the possibility of “bonuses” being paid to them to compensate them for lost income. Although such events are rare, the Steelworkers Union, in 1996, reached an agreement with Bridgestone-Firestone two years after the union workers went on strike. The agreement provided for the recall of almost all the workers at five U.S. plants and the payment of $15 million in bonuses to them. The Steelworkers charged the Japanese-owned company with illegally replacing the 6,000 striking workers. 23

Why Strikes Occur

Labor relations researchers have presented three basic models that explain why strikes actually occur. The first is the accident model, which suggests that negotiators (both union and management) act rationally and have substantial incentives to avoid strikes. Thus, they usually seek to reach a settlement without a strike. Strikes, therefore, occur only accidentally because of bargaining errors, such as unrealistic expectations by union or management leaders, misperception of bargaining goals, or a substantial difference between union negotiators and their rank-and-file membership. The second theory focuses on joint strike costs and suggests that strikes are more likely to occur when the joint costs to management and the union are relatively low, for example, when management has substantial inventories and can use management or other personnel to keep operating for a substantial period of time without union members. The third theory views strikes as rational tactics in the bargaining process and suggests that they generally occur when the two parties have substantially different information. For example, a firm with a low ability to pay higher wages and remain solvent may have the incentive to endure a lengthy strike and convince the union of its financial condition. Research on strikes in the manufacturing industries for an 18-year period revealed that strikes were most often the result of bargaining errors or the accident model. Examples of strikes under the other two models, however, were also found. 24

The circumstances that cause workers to strike and form a picket line are often tense and thus can easily provoke strikers to “let off steam,” an impulse that can easily lead to serious misconduct. Workers on strike may resort to conduct that the employer believes is improper—conduct that causes damage to property or, in some cases, even bodily harm. The NLRB has held that activities of striking employees constitute serious misconduct when they “reasonably tend to coerce or intimidate employees.” 25  The application of this standard has led the courts and the NLRB to consider physical acts or threats of physical harm directed at nonstriking employees (called scabs) to be serious and warrant possible discharge. Actions that have been ruled as serious misconduct include the throwing of rocks or eggs, vandalizing a supervisor’s car, carrying a gun or a club on the picket line, and threatening physical harm. 26  In Clear Pine Mouldings, Inc., 27  the NLRB ruled that verbal threats alone could warrant the discharge of a striker who, while carrying a gun, threatened to kill a nonstriking employee. In most cases, the isolated instance of obscenities or name-calling alone is not considered serious strike misconduct. If an employer fires striking employees because of serious misconduct, the employer is not required to show that all the employees were engaged in the activity if they were “actively cooperating” in the misconduct. And violent activity can result in the removal of the participants from the protection of the National Labor Relations Act. An examination of misconduct cases led one labor attorney to conclude that arbitrators are generally tolerant of strikers’ misconduct, particularly if the employer provoked the incident. 28

Types of Strikes

Economic weapons such as a strike are necessary to the collective bargaining process. The  primary strike  is a strike between an employer and employee. For employees to be protected under the act, a labor dispute must exist between the striking employees and their employer.

Primary strike

A strike called by a union against the direct employer of its members when a labor dispute exists.

The act recognizes two types of strikes and handles them differently. An economic strike is called to affect the economic settlement of a contract under negotiation. An unfair labor practice strike is called to protest an employer’s violation of the National Labor Relations Act. For example, if a union member was fired for union activities, workers could stage a strike until the discriminatory practice was remedied.

Economic strike

An employee strike over the failure to negotiate economic issues such as wages, benefits, or other conditions of employment. During an economic strike, the employer is entitled to replace strikers permanently and need only reinstate those for whom it has vacant positions.

Unfair labor practice strike

A strike called over an employer’s action determined by law to be an unfair labor practice, such as employee discrimination because of union activity. Employers cannot hire permanent workers during a ULP strike.

Under either strike action, the worker retains status as an employee and thereby remains under the protection of the National Labor Relations Act. The worker’s right to reinstatement after a strike depends on the type of strike. After an economic strike, the employee is not entitled to reinstatement if the employer filled the job with a permanent employee during the strike. However, if the job has not been filled or becomes vacant when a replacement leaves, the worker can reclaim it. Employees are entitled to reinstatement after an unfair labor practice strike even if the employer has filled their positions. Strike misconduct by the employee in either case can disqualify the worker from reinstatement. A strike intended as an economic strike can become an unfair labor practice strike by the union if the goal is not legal as in  Case 6-1  .

CASE 6-1 Hot Cargo Contract

On April 21, 1998, the board certified the union as the exclusive collective bargaining representative of full-time and regular part-time building service employees employed by the company. The union and company subsequently met on four occasions in an unsuccessful attempt to negotiate a collective bargaining agreement. At the first meeting, the union representative presented the company representative with a contract proposal containing, among other terms and conditions, the following picket line clause:

No employee covered by this agreement should be required by the employer to pass picket lines established by any Local of the SEIU in an authorized strike.

During the four bargaining sessions, the parties agreed to various changes in the contract proposal but disagreed as to other provisions. The parties did not discuss the picket line clause during any of the bargaining sessions. At the end of the final bargaining session, the union stated that if the company did not accept the proposal then on the bargaining table, the union would strike. It is undisputed that the union’s proposed contract included the picket line clause.

After the company refused to sign the proposed contract, the union struck. The union’s business agent testified that an object of the strike was to get the company to sign the collective bargaining agreement. During the strike, the strikers informed the union that they wanted to return to work. The agent replied that he “would prefer [the strikers] to stay out for a little longer because we would have a better chance of getting a contract signed.” The parties knew that the contract contained the picket line clause, but this clause was never a topic of discussion or controversy during the negotiations. Rather, the parties disagreed over other contract terms, and it was those disagreements that provoked the strike.

Nonetheless, the company filed an unfair labor charge against the union alleging that because the union’s contract proposal contained a picket line clause prohibited by  Section 7 ) of the act and the union engaged in a strike to force or require the company to enter into a contract containing that clause, the strike violated  Section 7 (b)(4)(ii)(A) (prohibiting secondary boycott agreements).

The administrative law judge found that  Section 7 ) prohibited the picket line clause. He nevertheless recommended dismissal of the  Section 7 (b)(4)(ii)(A) allegation because he did not believe that the object of the strike was to force or require the company to enter into an agreement containing the picket line clause. The company appealed.

Decision

Like the ALJ, the NLRB agreed that  Section 7 (e) prohibited the picket line clause. Unlike the ALJ, however, the board found that the object of the strike was to force or require the company to enter into a contract containing the picket line clause, and therefore the union violated  Section 7 (b)(4)(ii)(A). The board noted that it is undisputed that the union engaged in a strike to obtain an agreement. Further, it is well established that a strike constitutes “coercion” within the meaning of the statute. The union proposed an agreement containing a picket line clause prohibited by  Section 7 (e). The union insisted that the company sign the contract or else the union would strike. When the company refused to sign the contract, the union began a strike. The strike was to compel the company to sign a contract, which, at all relevant times, included the clause prohibited by  Section 7 (e). Accordingly, the NLRB found that the union’s strike, which began on February 22, 1999, had as an object forcing or requiring the company to enter into an agreement proscribed by  Section 7  and that such conduct violated  Section 7 (b)(4)(ii)(A) of the act.

Source: Adapted from Local 32B-32J, Service Employees v. Pratt Towers Inc., 169 LRRM 1185.

A strike that begins as an economic strike may become an unfair labor practice strike if the union can prove that an employer is refusing to bargain in good faith. It is obviously to the union’s advantage to do so, as it is to management’s advantage to keep the strike an economic strike by continuing to negotiate in good faith. Management then has the option to hire replacement workers during the strike and keep the plant open, thereby lessening any adverse impact caused by the strike. At the end of the strike, the replacement workers can be retained, and the employer may have upgraded the workforce with minimal disruption. 29  Unlike economic strikers, who may be replaced, unfair labor strikers have a substantially unqualified right to return to their jobs, even if the employer hired replacements. Thus, the type of strike may be a critical issue to both parties and may be in dispute. 30

A strike technique that has recently gained favor with unions whose members work at numerous locations for the same employer is the rolling strike. A  rolling strike  targets one location at a time for a union walkout. The location, however, can change daily, making hiring replacements or covering locations with management nearly impossible. 31  For example, on August 11, 2005, baggage handlers and loaders represented by the Transport and General Workers Union staged a one-day walkout at Heathrow Airport in London, England, which stranded about 70,000 summer travelers. The walkout was to demonstrate support for workers fired by the airport catering firm and represented by the same union. 32

Rolling strike

A strike technique used by unions that moves a strike against an employer from location to location so that hiring replacement workers becomes more difficult.

It is interesting to note that courts will not allow an employer to assume that permanent replacement workers hired during a strike are antiunion. In NLRB v. Curtin-Matheson, the Supreme Court upheld the board’s rule that permanent replacement workers must be treated as any other group of employees when determining whether they wish to be represented by a union. That they took jobs while union employees were on strike does not create a presumption that they are antiunion. 33

Permanent Striker Replacement

This distinction between how striking employees are treated as a result of either an economic or an unfair labor practice strike was established by a Supreme Court decision in 1938. 34  In the Mackay case, the Court decided employers could permanently replace striking workers without violating the (then three-year-old) Wagner Act. The case involved a group of radio employees who decided to go on strike at midnight. The employer, believing it critical to stay “on the air” and provide continuous service, quickly filled the strikers’ positions. The strikers then realized their strike was not having the desired outcome and asked for their jobs back. Management decided to reinstate them only if their replacements chose to resign—and 11 replacements did not. The union employees then filed suit claiming the employer had “interfered with, restrained, and coerced” them and thus violated their rights under the National Labor Relations Act. The NLRB agreed with the employees but also agreed with the employer that the act did not prohibit the hiring of permanent striker replacements.

The Supreme Court agreed, and the  Mackay doctrine  was established in one of the most important cases in labor law history. The Court noted that although  Section 7  of the National Labor Relations Act prohibits the interference with employees’ right to strike, an employer has the right to continue the operations of a business and replace strikers. The Mackay doctrine has been somewhat limited by three NLRB decisions: (1) employers cannot permanently replace strikers who are striking over an unfair labor practice, (2) strikers who apply for reinstatement unconditionally must be placed on a “waiting list” and hired as jobs become available if they do not acquire other employment, and (3) employers cannot grant pay raises to replacements not offered to strikers. 35

Mackay Doctrine

A court decision rule that interprets the NLRA as allowing employers to replace striking workers with permanent workers unless it is determined that the strike was an unfair labor strike. Striking workers who apply for reinstatement may be placed on a waiting list and hired as jobs become available.

Before the 1980s, however, companies seldom replaced striking workers with permanent replacements for a number of reasons. Frequently, an economic strike was determined, after the fact, to be an unfair labor practice strike, and the replacement workers were displaced. Often the company used the issue of allowing the strikers to return to their jobs as a way to settle an economic strike.

Economic factors of the 1980s first led companies to use  permanent replacement workers  more than ever before. 36  Mergers, downsizing, and companies going out of business may provide many employers with available trained workers during a strike. High unemployment and a weakening of union membership caused workers to cross picket lines willingly and to take jobs at wage rates lower than union-bargained rates. Two high-profile strikes in the 1980s, the 1981 PATCO strike in the public sector, and the 1986 Hormel strike in Austin, Minnesota, in the private sector both resulted in the hiring of permanent replacement workers in situations where many observers thought it would be impossible, and therefore awakened employers to the power of using replacement workers to negate a strike. The documentary American Dream provides actual footage of the Hormel strike in a powerful presentation of the Hormel 25-week strike that gained national significance. Today many employers have found that the mere threat of hiring replacements can cause a strike to be avoided. For example, in 2008 the United Food and Commercial Workers Union, Local 1099, cancelled a planned strike after the Kroger Company ran full-page advertisements in the Cincinnati Enquirer seeking replacement workers. The hiring of permanent replacement workers can also lead to the decertification of a union. The NLRB ruled that workers on strike for over one year are not eligible to vote in a decertification election. Thus, an employer, in an effort to win a decertification election, might force a strike, employ permanent replacement workers for over a year, and then seek a decertification election knowing the union strikers are no longer eligible to vote in the election. This employer tactic grew in popularity after the 1981 PATCO strike. 37

Permanent replacement workers

Under the National Labor Relations Board, when workers are engaged in an economic strike, management can hire permanent replacements. After the strike, the striking workers cannot claim their jobs back.

If an employer has hired permanent replacement workers during a strike, then the union may want to negotiate a strike settlement agreement if a new contract is later approved. For example, in 2007, the Appalachian Regional Healthcare (ARH), which includes nine hospitals, hired replacement workers during a three-month strike by nurses. When a new contract was put before the striking nurses, ARH president Jerry W. Haynes announced that 150 replacement nurses would be permanent, and the 500 striking workers would be placed on a waiting list. Pat Tanner, chief negotiator for the nurses’ union, declared the decision “an outrageous insult” and insisted on a separate strike settlement agreement that provided for hiring back the striking nurses and letting go the replacement nurses. The ARH also stipulated that such an agreement would need to state the strike was over wages—thus, an economic strike—while the union insisted it was primarily over staffing levels and mandatory overtime. 38

In the past several years there has been a growing debate over a proposed amendment to the NLRA that would ban the hiring of permanent replacement workers during a strike. Supporters of the proposal contend that the escalating practice of hiring permanent replacement workers has weakened workers’ ability to bargain collectively as expressly provided by the NLRA and has become a significant cause of the decline of unionization in the United States. Opponents of the proposed ban respond that it would tip the scale in favor of unions and even lead to more strikes that would disrupt the economy. Why? Individuals would be less likely to cross a picket line for jobs that were only temporary and end once the strike was settled. Both sides have legitimate points, and the issue may be central to the future of union–management relations in the United States. One “middle-ground” proposal would prohibit employers from hiring permanent replacement workers for a specified number of days after a strike had begun and thus provide both sides some bargaining leverage. 39  Congress, which thus far has chosen not to act, ultimately will decide the issue, and therefore employers remain free to hire permanent replacement workers.

Picketing

The use of  picket lines  during a strike varies according to the type of union involved. A craft union strike generally uses only two or three pickets. The purpose of the picket is simply to inform other craft union members that a strike is in progress. Because craft union workers are skilled laborers, workers who will not honor a picket line cannot easily replace them. Craft unions may use larger picketing groups when protesting the use of a nonunion contractor.

Picket lines

A line or procession of union members or union supporters staging a public protest outside an employer concerning a labor dispute––often due to failed contract talks.

An industrial union strike, however, often requires an active and large picket line to discourage unskilled laborers from keeping the production lines in operation. Mass picketing generally takes place at least at the start of a strike to persuade union members to join the strike and to keep strikebreakers away. In 2003, for example, almost 2,000 clerical, maintenance, and food service workers at Yale University rallied supporters in New Haven, Connecticut, by picketing. On one day in September, the workers’ demonstration closed down the center of the city as well as the university with over 5,000 supporters of the Hotel Employees and Restaurant Employees International Union. As the demonstration became unruly, about 100 people were arrested, but the activity led to a new eight-year contract with 4–5 percent annual wage increases and sizable pension increases. 40

An employer may respond to mass picketing by obtaining a court injunction against the union to refrain from certain activities. An injunction, usually in the form of a temporary restraining order, is possible if the strike activities have included incidents of violence, personal injury, or damage to property. In such cases, the court can order specific restraints on the union’s use of pickets—limiting, for instance, their number and location. 41

In Overstreet v. United Brotherhood of Carpenters (2005), 42  the union had a dispute with three contractors and tried to coerce them by putting pressure on 18 retail establishments that did business with the three contractors. The pressure was applied by the union erecting 4 × 15 foot “banners” near each retailer that read: SHAME ON [name of retailer], LABOR DISPUTE. Union members then placed the banners outside the entrances to the 18 retail businesses, even though their dispute was not with the retail businesses but with the contractors. They did not block the store entrances or talk to customers. The U.S. Ninth Circuit Court held the bannering was not unlawful secondary picketing. The court found that the union’s actions did not “threaten or coerce, or restrain” because there was no picketing or one-on-one communication with employees or customers. Nor was there any unlawful “signal picketing,” communication to employees, because the banners were directed at customers.

Today, picket lines have lost the power they once provided unions. In years past, a picket line in front of a plant, store, or construction site could cause a major financial loss to the employer. Many union and nonunion workers and their families and friends would “honor” the picket line. Crossing the line was the equivalent of pushing an old lady off a curb. Labor sympathizers would refuse to enter picketed workplaces as employees or customers. When unions represented 36 percent of the labor force, almost every adult had at least one union member in the family—and thus was sympathetic to labor’s cause. Today, that just is not the situation. Even Rachelle Pachtman, the daughter of a union man, raised on union wages and benefits, crosses picket lines. “If there’s a meeting in a hotel where workers are striking. ... I’m going to the meeting. ... But I feel terrible.” 43

Lockout

Although less frequent than strikes, an employer  lockout  may also be used in a labor dispute. The employer may withhold employment to resist union demands or actually to force concessions from the union. Layoffs, shutting down, or bringing in nonunion workers can accomplish the lockout. For example, in July 2005, management at NuTone Inc. in Madisonville, Ohio, notified 450 members of the United Auto Workers Local 2029 that they were locked out of their jobs. The union members were working without a contract after their contract with NuTone expired in June, and they had rejected the company’s last offer. The locked-out employees were eligible for unemployment benefits. 44  The employer again must measure the same factors involved in withstanding a strike when deciding to lock out the employees: loss of profits, cost of continued operations, possible loss of customers, and the effect on future labor negotiations. Employer lockouts can be in violation of the National Labor Relations Act as an unfair labor practice if they are invoked to prevent unionization or to preclude collective bargaining before it begins.

No-Strike, No-Lockout Provision

A contract clause restricting both the union’s ability to call a strike and management’s ability to stage a lockout.

Courts have supported both defensive and offensive employer lockouts under the Taft-Hartley Amendments. In defensive actions, employers are justified in a lockout if a threatened strike caused unusual economic loss or operational difficulties. In multiemployer bargaining, a strike against one employer can justify a lockout by the others to preserve the integrity of the multiemployer bargaining unit. Offensive economic lockouts have been justified after an impasse has developed during collective bargaining negotiation or if the lockout was used to pressure employees to end the labor dispute on grounds favorable to the employer. The courts reasoned that an economic strike by employees seeks the same end, and therefore the lockout is protected. 45

The use of replacement workers during a lockout is governed by the same rule as using replacements during a strike. Permanent replacements may be hired during a lockout to affect the economic outcome of a contract under negotiations but not if the lockout is a result of an unfair labor practice by the employer. 46

No-Strike, No-Lockout Provisions

Most agreements in the private sector contain provisions restricting both the union’s ability to call a strike and management’s ability to stage a lockout, such as this Agreement between C. Lee Cook Division, Dover Resources, Inc., and Lodge No. 681, International Association of Machinists and Aerospace Workers AFL–CIO, 2007–2012:

Article XIII

Strikes, Stoppages, and Lockouts

During the life of this Agreement, the parties hereto agree that there will be no lockout of employees or strikes, direct or sympathetic, or work stoppages, or slowdowns of any type or character, except where either party hereto willfully refuses to abide by a decision duly rendered and handed down by an arbitrator acting under authority of the provision of Article VII. 47

Usually either both or neither type of provision is negotiated because they are reciprocal in nature. No-strike and no-lockout clauses often contain similar, if not identical, language, falling into two general categories: (1) unconditional bans (63 percent of agreements) on interference with production during the life of the contract, and (2) conditional bans that permit strike or lockout under certain circumstances, usually one or more of the following: 48

· Exhaustion of grievance procedure

· Violation of arbitration award

· Refusal to arbitrate dispute

· Noncompliance with portion of agreement

· Deadlocked contract reopener

The discipline or discharge of employees participating in illegal strikes under a no-strike provision may be permitted in the agreement. Most of these clauses provide for appeal by the employee. 49

No-strike clauses are usually highly sought by industry, but severe circumstances may alter their value. For example, the U.S. steel industry had enjoyed an industry-wide no-strike agreement for 36 years when in 1986, the six major U.S. steelmakers decided to bargain separately with the United Steelworkers of America. The firms’ fierce competition for survival forced them to give up the safety of joint negotiations and the continuance of the no-strike pact. The result was the longest U.S. steel industry strike in history. 50

Because both management and union negotiators seek to successfully negotiate a new agreement that meets their interests, they usually want to resolve an impasse. They can decide early on before the contract has expired to seek a facilitator or mediator to assist them in the negotiation process, or they can request assistance after the contract has expired. Entering into negotiations long before the contract expiration date, however, can relieve some of the deadline pressure. The use of joint labor–management study committees before and during the contract negotiations also can alleviate much of the conflict present in traditional bargaining sessions.

Still, sometimes an impasse cannot be avoided, and impasse resolution becomes one of the stages of negotiations. Sometimes a pressure tactic such as a strike, lockout, or the hiring of permanent replacement workers is effective in bringing the other party back to the table. Often informal communication through a neutral third party enables the parties to resume talks to a successful conclusion. Traditionally, however, an impasse is often resolved by resorting to  mediation  ,  arbitration  , or fact-finding.

Mediation

The introduction of a neutral third party into a grievance situation or collective bargaining impasse. Although mediators have no decision-making powers, they use their skills and work actively to achieve a settlement that is mutually agreeable to both sides.

Interest arbitration

A process used to resolve an impasse in negotiations where the parties submit the unresolved items to a neutral third party to render a binding decision.

Mediation

Mediation is a voluntary process selected by both parties to assist them in moving beyond impasse to a settlement. Mediation services are usually provided by a third-party neutral, experienced and trained in dispute resolution techniques. A mediator has no authority to decide the unresolved issues, and instead relies on personal powers of persuasion, tenacity, creativity in suggesting alternatives to issues, and experience in labor relations disputes. The lack of authority to impose a decision on the parties is both a major strength and weakness of mediation. It is a strength because the parties are fully aware that they will directly participate in the formulation of the terms of any agreement on any issue. Thus the parties, to some extent, believe they control the outcome of the process—and they know that should the dispute go to arbitration, they will have no control over the decision, which is often final and binding. However, the lack of authority to decide issues is also a major weakness of mediation because there is no guarantee of a settlement.

Another major advantage of mediation is that it is confidential. The mediator usually destroys all papers and evidence of the case immediately after it is resolved, and cannot be required to testify in court—which often enables the parties to be more flexible in their efforts to find a settlement. By contrast, arbitration and court hearings take place in public forums.

For these reasons, control of any decision and confidentiality, as well as others, mediation is increasingly used to resolve labor disputes, and is generally preferred over other methods by the parties. In fact, about 85 percent of labor–management grievance disputes are resolved through mediation. 51  In addition, about 90 percent of management and 92 percent of union representatives reported a positive experience when using Federal Mediation and Conciliation Services’ mediators to resolve a collective bargaining impasse. 52  How do mediators resolve

Tips from the Experts Successful Mediator Practices

Create a Positive Atmosphere!

Simple, but effective, tactics include: (1) change the seating of the parties—even seat them on the same side of the table across from the mediator, (2) move the parties to separate rooms to break tension, (3) create a deadline on an issue—and resolve it before moving on to the next issue.

Maintain Neutrality

Above all else mediators must project neutrality! Treat both sides the same—even treat the hostile person the same as the polite person.

Absorb Conflict

Let the parties know you are listening; “I hear your anger,” but don’t respond, and instead absorb their hostility—negotiators will not argue for very long with a mediator who won’t argue with them.

Provide Reality Checks

One of a mediator’s most useful tactics. If a proposal, idea, or fact is unreasonable or extreme, ask for a reality check—“What evidence can you present the other side to support your proposal?” Or, “Do you really want to jeopardize the progress made thus far by offering a value that is triple the last one?”

No Conscience

A mediator’s job is to get an agreement—not to decide if an offer is “fair” or “just.” If the parties agree to it, then it is right, no matter how bizarre it might appear to the mediator! Avoid the “novice’s curse”—drafting what a mediator believes is a neutral proposal—ask the party making the proposal to draft it and thus avoid any possible blame by the other party if they don’t agree with the language.

Source: Adapted from Patrick J. Cleary, The Negotiation Handbook (Armonk, NY: Sharpe Pub., 2001), pp. 137–62.

labor disputes in most cases? Patrick J. Cleary, former chairman of the National Mediation Board, suggests several common mediator practices in “Tips from the Experts.”

Mediation services are available through the Federal Mediation and Conciliation Service (FMCS: www.fmcs.gov) and similar state agencies. A mediator such as Louis Manchise in Profile 6-1 assists in rescheduling negotiation sessions, reopening discussions, and making suggestions on possible areas of agreement. If a mere misunderstanding of the parties’ positions has caused an impasse, an unbiased third party can often show them how close they actually are to agreement. If the substantive distance between the parties causes the impasse, a mediator will use a variety of techniques to find a proposal both sides can agree on. 53

Profile 6-1 Louis J. Manchise: Mediator

Louis J. Manchise has worked as a mediator in the Greater Cincinnati, Ohio, region for the past 33 years. Most recently, before joining the faculty at Northern Kentucky University, he served as director of mediation services for the Federal Mediation and Conciliation Service (FMCS) in Cincinnati. He is known in the conflict management community as a dedicated, hardworking, fair, and creative problem solver. Throughout his career he has mediated a wide spectrum of disputes. The cases he has been involved in include labor– management negotiations, employee–employer matters, commercial disputes, court cases, grievances, equal employment opportunity complaints, peer conflict, and inter- and intragovernmental conflicts at all levels: federal, states, counties, and cities.

Louis J. Manchise, national award-winning federal mediator.

Source: Courtesy of Louis J. Manchise, Vice Chair, Board of Directors, The Alternative Dispute Resolution Center, Northern Kentucky University. Accessible at www.adr.nku.edu. Used by permission.

A FMCS survey of 1,168 pairs of union and management leaders found that mediation is in greater demand today than in past years. Possible reasons include the economy and increased polarization of labor–management relations which often lead to an impasse over major issues such as wages, job security, and health care. Fifty percent of the leaders responded that mediation is needed to resolve differences and prevent work stoppages. 54

Interest Arbitration

Interest arbitration  is a distinctly different process from mediation. Like mediation it involves a neutral third party (or panel), but unlike mediation the arbitrator is given the authority to make a final and binding decision on the unresolved issues in a stalled contract negotiation. It is important to realize that interest arbitration is different from grievance arbitration (see  Chapter 12 ) which utilizes arbitration to resolve rights disputes that have arisen during the life of a contract. Labor negotiators generally prefer to use mediation in resolving a contract negotiation impasse because they maintain control of the outcome, and therefore interest arbitration is infrequently used in the private sector to resolve a contract impasse.

But when negotiation and mediation have failed to produce a settlement, and both parties prefer a settlement to a continued impasse, or other possible outcomes, then they may agree in writing to utilize interest arbitration. Why? The primary benefit of interest arbitration is that it will produce a settlement of unresolved issues which is “final and binding.”

The most common criticism of interest arbitration is that arbitrators too often simply “split the difference” or “meet in the middle” on key issues such as wages. This possibility may cause the parties to take only extreme positions—thus the middle if chosen will be closer to their real position. Another criticism is the there is little incentive to reach an agreement during negotiations if the parties believe the issue will end up in arbitration—thus the anticipation of arbitration has a “chilling effect” on their motivation to settle. In addition, some critics of arbitration believe that in some cases it has a “narcotic effect” on negotiations—that is, the parties become more reliant on arbitration to achieve their desired gains as they become more knowledgeable of the arbitrator’s decisions. 55  These criticisms of interest arbitration may cause negotiators to avoid arbitration, even when in a specific situation they believe it would be useful. They don’t want the other party to anticipate the use of interest arbitration, and then bargain at the table under the chilling or narcotic effect, which may greatly prejudice their bargaining proposals. Yet another criticism of interest arbitration is that it does not offer the confidentiality of mediation.

In the United States three federal laws govern private sector arbitration of disputes: the 1947 Labor–Management Relations Act (LMRA), which provides for the use of interest arbitration to resolve collective bargaining disputes; the 1926 Railway Labor Act, which has jurisdiction over labor disputes involving railroad, airline, and mass transit industries; and the 1925 Federal Arbitration Act, which provides for the arbitration of disputes in commercial cases. Interest arbitration usually begins when one or both parties submit a request for arbitration to the American Arbitration Association (AAA), the Office of Arbitration Services (OAS) of the Federal Mediation and Conciliation Service, or a state or local agency.

Fact-Finding

This is a semijudicial method of dispute resolution, which is primarily used in the public sector. A hearing, similar to the one used in the arbitration process, is used to assemble and make the facts public through the media. But the fact-finding panel, like a mediator, can only recommend how an impasse may be resolved. Fact-finding can be used to delay a strike, bring an unreasonable demand to the public’s attention, create an atmosphere for new ideas, and if reasonable recommendations are made, pressure a party into acceptance. This technique is used where such pressure may force the parties to reach an agreement, especially if the facts show that one side is unreasonable.

Final-Offer Arbitration

This method of dispute resolution requires both parties to submit their final offer on an unresolved issue to an arbitrator or a panel that has the authority to select one of the proposals. Final-offer arbitration gives the parties the motivation to make their final offers reasonable. Both parties realize that a less reasonable offer has a lower chance of selection. Therefore, they strive to make their offer appear as fair and reasonable as possible. Final-offer arbitration may take one of two forms: final-offer total package, which restricts the arbitrator to selecting either the management’s or union’s entire final proposal on all unresolved issues, or final offer issues by issue, which allows the arbitrator to select either the management’s or union’s final proposal on each issue separately. In recent years final-offer arbitration has received a great deal of media coverage because it is used to resolve salary disputes between major league baseball players and the club owners. The collective bargaining agreement between the club owners and the union specifies the use of final-offer arbitration: 56

Article VI.—Salaries

Sec. F. The arbitration panel shall be limited to awarding only one or the other of the two (salary) figures submitted. There shall be no opinion.

The final-offer salary arbitration process has resulted in roughly an even number of decisions won by players and the clubs from 1974 to 2010, with the clubs winning 52.6 percent of the cases decided by three-member panels. In 2010, for example, the players won three of eight arbitration hearings. Ryan Theriot’s, of the Chicago Cubs, final offer was $3.4 million, the Cubs’ final offer was $2.6 million, and the panel chose the Cubs offer. Cory Hart’s, of the Milwaukee Brewers, final offer was $4.8 million, and the Brewers’ final offer was $4.15 million, and the panel chose Hart’s offer. 57

Mediation–Arbitration

As a combination of mediation and arbitration, the parties agree to bring in a mediator with authority to arbitrate any unresolved issues, should the mediation, which occurs first, fails. This method can, if it goes well, combine the best of the two methods—it provides a mediation in which the parties together develop a mutually agreeable settlement, but if that fails, then the parties are guaranteed a decision by an arbitrator. Since the arbitrator is the same person, he/she knows the issues well and may arrive at a more informed decision more quickly. A potential disadvantage of this method is the parties not fully participating in the mediation, since they believe it will lead to arbitration.

Reducing an Agreement to Writing

At some point agreement is reached on wages, hours, and other terms and conditions of employment. Today the agreement is written, but when the National Labor Relations Act was passed, it did not expressly require that a collective bargaining agreement be reduced to writing and signed by the parties. Nor did it address whether bargaining was to be a process of continuing negotiations or even what the legal status of a signed agreement might be. These questions were left to the National Labor Relations Board (NLRB), the courts, and Congress to answer in piecemeal fashion.

As early as 1941, the Supreme Court imposed a  duty to sign  , or a duty on the parties in a collective bargaining relationship to reduce to writing and sign any agreement reached through the bargaining process. A refusal to sign was declared a refusal to bargain collectively and an unfair labor practice because, the Court found, a signed agreement had long been informally recognized as a final step in the bargaining process. The Court thought it obvious that the employer’s refusal to sign an agreement “discredits the [labor] organization, impairs the bargaining process, and tends to frustrate the aim of the statute to secure industrial peace through collective bargaining.” 58  In the Taft-Hartley Amendments, Congress recognized the need for a written agreement and defined the bargaining duty as including “the execution of a written contract incorporating any agreement reached if requested by either party.” 59  Part of the negotiator’s role in the collective bargaining process is drafting the final agreement. The negotiator should try to

Duty to sign

The obligation of both parties to reduce to writing and sign any agreement reached through the collective bargaining process. Refusal to sign can be declared an unfair labor practice.

Tips from the Experts Arbitrator

What are the three most common drafting errors in collective bargaining contracts that cause problems for an employer or the union?

1. Failure to define a contractual term or phrase. Arbitrators give words their ordinary and usual meaning unless there is an indication that the parties intended a special meaning.

2. Failure to specify the scope of the arbitrator’s authority. For example, is the award binding or merely advisory? Does the arbitrator have the usual authority to review the penalty imposed once he or she determines that the grievant did commit the offense with which he or she was charged?

3. Failure to encourage resolution of grievances at the earliest possible step. Such a failure would encourage open and full discovery and exchange of information in the lower grievance steps and could enhance the prospects of settlement or avoid the element of surprise at the arbitration hearing.

be clear and concise while accurately reflecting the agreement and the understanding of the parties. One author suggests that before it is signed, the final agreement should be circulated for comment among nonnegotiating union and management personnel it will affect:

Once contract provisions are committed to paper, a good test of their meaning is to have a wide variety of different individuals, wholly unfamiliar with what has transpired during negotiations, read and interpret each provision of the contract. Particularly appropriate candidates for this  provisional intent test  are those who enforce, administer, police, or are governed by the terms of the agreement—stewards, foremen, department superintendents, shop chairmen, plant managers, grievance committeemen, rank-and-file members, etc. If provisional meaning is misconstrued, revision is in order. 60

Provisional intent test

When knowledgeable but uninvolved parties read the draft of a collective bargaining agreement after it has been reached to determine whether the drafting accurately reflects the interests of the parties.

KEY PROVISIONS OF A CBA

The agreement between a union and an employer is not an employment contract. The employment contract is between the employer and the employee. It may be expressed verbally or in writing, or it may simply be a function of the employer’s job offer and the employee’s acceptance. The union is not a party to this employment contract, but the agreement between the union and the employer does shape the terms of that independent employment contract by establishing company policy in the areas covered by the agreement. The labor agreement also serves to define the union’s relationship with management and provides the means to enforce its provisions. Each labor agreement is unique in terms and language, but all have basic similarities. Most labor contracts contain four main sections: union security, wages and benefits, management rights, and administration. Union security and management rights are discussed in the following sections of this chapter, wages and benefits are presented in  Chapters 7  and  8 , and contract administration in  Chapters 10 ,  11 , and  12 .

Union Security

Union security refers to a union’s ability to grow and to perform its exclusive collective bargaining role without interference from management, other unions, or other sources. A key element to a union’s security is a provision in the collective bargaining agreement requiring employees to join the union and pay union dues as a condition of continued employment. Such a provision assures the union and its members that all the employees who share the benefits of collective bargaining agreements pay for the union’s cost. Required union membership increases the financial base of the union and may increase its ability to represent its members at the bargaining table.

Unions are concerned about their security for many reasons. For instance, a union is certified as the exclusive bargaining agent for only one year following a representation election.

ARTICLE II Union Security

1. Agency Shop

a. Subject to applicable law, all employees who, as of the date of this Agreement are members of the Union in good standing in accordance with the constitution and by-laws of the Union or who become members of the Union following the effective date of this Agreement, shall, as a condition of employment, remain members of the Union in good standing insofar as the payment of an amount equal to the periodic dues and initiation fees, uniformly required, is concerned.

b. Subject to applicable law, all present employees who are not members of the Union and all individuals hired after the effective date of this agreement, shall, beginning on the thirtieth day following the effective date of this agreement or the thirtieth day following employment, whichever is later, as a condition of employment, either become and remain members of the Union in good standing insofar as the payment of an amount equal to the periodic dues and initiation fees, uniformly required, is concerned, or, in lieu of such Union membership, pay to the Union an equivalent service charge.

Figure 6-3

Union Security Clause.

Source: Agreement between General Electric Aviation and Lodge No. 912, International Association of Machinists and Aerospace Workers, AFL-CIO, 2007–2011. Used by permission.

Rival unions may not seek to organize its members during that short time. Although a union security provision cannot prevent such raiding after the year, loyalties are developed and strengthened by participation in the union for that year.

Union Security Clause

Many collective bargaining agreements contain a union security clause similar to the one in  Figure 6-3 . The clause requires that all employees within the bargaining unit become and remain members in good standing as a condition of employment. This phrase “members in good standing” means that employees have the option to choose either full membership, which includes the payment of all dues, fees, and assessments as well as prescribed membership obligations, or limited membership, which requires the payment only of those dues and fees directly needed to support the union in performing representation duties such as collective bargaining and grievance settlement. Thus, the costs of limited memberships are normally lower than those of full membership. The union, as the exclusive bargaining representative of all employees in the bargaining unit, is required to inform employees of their membership rights. These rights include the option to refrain from supporting union activities other than those involved in collective bargaining, contract administration, and grievance arbitration. The employer is not the representative of the employees and thus has no obligation to inform employees of their membership rights. Unions, to maintain solidarity and secure greater funding, strongly encourage employees to maintain full membership. It is also important to note that the clause specifies the employer’s right to “secure new employees from any source”—not only union members or applicants referred by the union. Also note the employer agrees to terminate any employee—upon request from the union—for failure to become a member in good standing.

Union Security Clause

A CBA provision that requires employees to be members in good standing of a union.

The 1935 National Labor Relations Act protected union security in several ways. Company unions were prohibited because the act’s proponents saw them as a major threat to employee rights. 61  Yellow-dog contracts, whereby employees agreed not to join unions in order to get hired, and blacklisting of union sympathizers were made illegal. The act allowed an employer to make an agreement with the union requiring union membership as a precondition to employment. As a result, the closed shop clause became common.

Union security increased union membership. Automatic  check-off provisions  in the contract authorizing the employer to withhold dues from a member’s wages ensured that the union would receive payment. For example, see  Figure 6-4 . Dues “check-off” is a common method by which the union collects the monthly dues and fees from members through payroll deduction. Employees must voluntarily authorize the payments, in writing, and their authorization cannot be irrevocable for more than a year or the life of the contract, whichever is shorter. The check-off is often renewed automatically each year unless the employee revokes it. A dues check-off provision can be critical to a union, and no longer can be considered a guaranteed concession from employers. In 2005, for example, Indiana stopped collecting dues from teachers and by 2011 dues-paying members had declined by 90 percent. Other states including Colorado, Utah, and Washington experienced similar declines after enacting state laws . 62

Check-off

A contract provision requiring that the employer deduct union dues directly from union employee paychecks. The collected dues are then deposited in the union treasury.

Public reaction to the growth of union membership and numerous labor–management conflicts following World War I led to the 1947 passage of the Taft-Hartley Amendments to the National Labor Relations Act. Added to  Section 7 , which guaranteed freedom of organization, was a guarantee of the employee’s right not to organize and engage in union activity. The closed shop was outlawed, although the amendments allowed union shops to be negotiated in future contracts. A union shop required union membership on or after 30 days of employment. The hiring power, therefore, was restored to the employer. However, although the act allowed union shops, it also permitted states to outlaw union shops by passing right-to-work laws that prohibit agreements requiring membership in a labor organization as a condition of employment (see next section). The Taft-Hartley Amendments also limited the dues check-off practice by requiring a written authorization from each union member.

ARTICLE 3

Union Shop Conditions and Check-off

Union Shop—It shall be a condition of employment that all employees of the Employer covered by this Agreement who are members of the Union in good standing on the execution date of this Agreement shall, on the sixty-first (61st) day following the execution date of this Agreement become and remain members in good standing in the Union. It shall also be a condition of employment that all employees covered by this Agreement and hired on or after its execution date shall, on the sixty-first (61st) day following the beginning of such employment become and remain members in good standing in the Union. The Employer may secure new employees from any source whatsoever.

During the first sixty (60) calendar days of employment, a new employee shall be on a trial basis and may be discharged at the discretion of the Employer, and such discharge shall not be subject to the Grievance and Arbitration Procedure.

Check-Off—The Employer agrees to deduct weekly Union dues and/or service fees and uniform assessments from the wages of employees in the bargaining unit who individually certify in writing, authorization for such deduction in a form authorized by law. The Employer agrees, in the case of new Union members, to deduct the Union initiation fee and in the case of a non-member, an initial service fee from the wages of any new or non-member Union employee who certifies in writing authorization for such deduction in a form authorized by law.

CHECK-OFF A contract provision requiring that the employer deduct union dues directly from union employee paychecks. The collected dues are then deposited in the union treasury.

In the event no wages are then due the employee, or are insufficient to cover the required deduction, the deduction for such week shall nevertheless be made from the first wages of adequate amount next due the employee and thereupon transmitted to the Union.

Upon written request by an authorized representative of the Union, the Employer agrees to dismiss any employee within five (5) days from receipt of such request for failure to comply with Article 3, Section 3.1, limited only by the Labor Management Relations Act of 1947.

Figure 6-4

Automatic Withholding of Union Dues

Source: Agreement between The Kroger Co. and the United Food and Commercial Workers International Union AFL-CIO, 2007–2010. Used by permission.

Finally, court decisions have limited the application of a union shop provision by narrowing the meaning of union membership. The Supreme Court has long held that being a union member for the purpose of complying with a union shop provision could not require more of a person than paying dues or limited membership. A union could not require attendance at meetings or participation in union activities. 63

In a historic decision, CWA v. Beck, the Supreme Court limited a union shop requirement for the paying of dues as a union member to only that portion of the union’s dues that represented the cost of bargaining and representation. This important decision covered both private and public sector unions, therefore individual union members can choose not to pay any funds to support “noncore” matters such as political contributions or lobbying efforts. 64  In 1995, the NLRB expanded the Beck holding to include an affirmative duty on the part of a union to inform its members of their rights under Beck to object to the expenditure of their dues for political or fraternal activities. 65

Forms of Union Security

Union security clauses may take several basic forms:

1. Closed shop. Outlawed by the Taft-Hartley Amendments, the closed shop provision allowed the employer to hire only union members. To get a job, a person first had to join the union.

Closed shop

A union security arrangement that requires employers to hire only union members. Closed shops were generally made illegal under the Taft-Hartley Act.

2. Open shop. No employee is required to join or to contribute money to a labor organization as a condition for employment under the open shop.

Open shop

A form of union security in which the workers within a bargaining unit may decide whether to join a union. Those who choose not to join are not required to pay union dues or fees or amounts equal to dues or fees.

3. Union shop. A  union shop  provides that within a specific period of time, usually 30–90 days, an employee must join the union (full or limited membership) to continue the job with the employer. Union membership under such a provision must be available on a fair and nondiscriminatory basis, and fees and dues must be reasonable and can be limited to an amount reflecting only the cost of bargaining and representation (see  Figure 6-4 ).

Union shop

A union security provision that all new employees must become union members in good standing.

Although the National Labor Relations Act seems to allow a union to negotiate contracts requiring membership in the union as a condition of employment, in NLRB v. General Motors Corporation, the Supreme Court held that “membership” means paying union dues—the amount needed by the union to pay the costs to conduct collective bargaining. Thus, an employee cannot be required to sign a membership card or take an oath of membership. Despite the General Motors decision, many union leaders tell employees they must join the union. 66

Employees can petition the NLRB to hold a deauthorization poll—in which they can vote to revoke a union shop clause. Such petitions are rare however.

4. Union hiring hall. A union hiring hall provision is lawful and common in the construction, trucking, and longshoring trades. This form requires an employer to hire employees referred by the union, provided the union can supply a sufficient number of applicants. As long as the union refers union and nonunion members alike and does not require membership before the seventh day of employment, such provisions are legal. A hiring hall run by the International Brotherhood of Electrical Workers Local 48 (IBEW) in Portland, Oregon, was determined to be illegal by the NLRB because it dispatched workers based on their willingness to (1) engage in union organizing, (2) leave a nonunion employer and join the union, and (3) reward those who join the union with additional jobs. 67  And a refusal by the IBEW in Indiana to refer an electrician who was qualified and the next in line for referral because he owed the union back dues was declared an unfair labor practice because the labor agreement in question did not contain a union security clause. 68

5. Agency shop. Agency shop provisions require employees to contribute a sum equal to membership dues to the union, but they are not required to join the union. The union is

Agency shop

A labor contract provision that requires employees to contribute a sum of money equal to union membership dues but does not require the employee to join the union. The employee benefits from collective bargaining by the union and in turn gives financial support to the union for negotiations, contract administration, and other actions.

provided with the financial support of employees who benefit from their collective bargaining, but the employee’s right not to join the union is retained.

6. Maintenance of membership. The maintenance of membership provision requires those who are union members at the time a union contract is entered into to remain union members but only for the duration of the agreement. Nonunion members are not required to join.

7. Miscellaneous forms of union security. A preferential shop requires the employer to give hiring preference to union members. The check-off of union dues from an employee’s paycheck operates as a union security form because it protects the source of union funding and automatically keeps the employees in good standing with the union. This form of union security is often the only legal device available in right-to-work states. Superseniority gives union leaders top seniority for layoff purposes and indirectly increases union security by ensuring the continuity of its leadership.

NLRB and court decisions have altered some of these traditional areas of union security. Agency shop nonunion members are increasingly challenging the amount of representation fees they are charged. A 1998 Supreme Court decision, Air Line Pilots Association v. Miller et al., held that such challengers may not be required to use the arbitration process provided in a contract but can challenge a union’s calculation of agency shop fees in a federal court. Citing its previous ruling in Teachers v. Hudson, the Court outlined three procedural protections for nonunion workers who object to the agency-fee calculation: They must be given (1) sufficient information to determine the fees estimation, (2) the escrowing of any amount in dispute driving the challenge, and (3) a reasonably prompt opportunity to challenge the amount of the fee before an “impartial decision maker.” According to the Court, the impartial decision maker can be a federal judge. 69  In a follow-up to the guidance in Hudson, the Supreme Court upheld a Washington state law that requires a union to seek and obtain from employees who pay an agency-fee affirmative authorization before it can spend those fees for any noncollective bargaining purpose. 70

Right-to-Work Laws

The Taft-Hartley Amendments to the NLRA also added to  Section 7  of the National Labor Relations Act the following:

Nothing in this act shall be construed as authorizing the execution and application of agreements requiring membership in a labor organization as a condition of employment in any state or territory in which such execution or application is prohibited by state or territorial law.

This provision allows states to enact laws prohibiting the union or agency shop forms of union security. Only 22 states, mostly in the West and the South, have done so (see  Figure 6-5 ).

Right-to-work  legislation understandably evokes great emotions from both proponents and opponents. 71  A significant research study published in 2004, however, concluded that states with right-to-work laws have 9 percent lower levels of union membership (union density) with all other significant factors held constant. Union membership varies greatly from state to state with the highest levels in New York (24.6 percent), Alaska (22 percent), Michigan (21.8 percent), California (18.4 percent), and the lowest levels in North Carolina (3.1 percent), South Carolina (4.2 percent), Utah (5.2 percent), and Arizona (5.2 percent). Although several factors influence union density, including “social capital” or workers’ attitudes toward unions, and other social and political factors, the existence of a right-to-work law within a state has the most significant impact on the level of union membership within the state, and therefore it is an issue that raises strong emotions. 72

Right-to-work

The federal law permitting states to prohibit agreements requiring membership in a labor organization as a condition of employment.

Figure 6-5

Union Membership and State Right-to-Work Laws.

Source: Union Membership data derived from Additional Earnings and Union Membership Data, Companion to Union Membership and Earnings Data Book: Compilations from the Population Survey(2002).

Opponents contend that right-to-work legislation is an attempt to change the bargaining power at the negotiating table in management’s favor. In addition, “right-to-work” as a slogan is misleading. As civil rights leader Martin Luther King once said:

In our glorious fight for civil rights, we must guard against being fooled by false slogans as “right-to-work.” It provides no “rights” and no “works.” Its purpose is to destroy labor unions and the freedom of collective bargaining.”

State right-to-work laws guarantee no one a job and in the opinion of opponents confer rights only on employers. 73  The phrase implies the union’s concomitant right to prevent a person from working. According to union advocates, the requirement of union membership as a condition of employment is no more restrictive of an individual’s freedom than the requirement of specific hours of work or of certain minimal job qualifications. Union members contend that employees should support the union primarily because of the benefits that union and nonunion employees alike receive through collective bargaining agreements. 74  Finally, opponents point out that the per capita income in states not having right-to-work laws is higher.

Proponents of the right-to-work legislation believe that it affirms the basic rights of a person to work for a living whether he or she belongs to a union or not. 75  They contend that no private organization should be able to tax a person and use that money to support causes with which all the members may not agree. Compulsory union membership can mean that a union does not need to be responsive to its members. And, according to proponents, right-to-work legislation encourages economic development because employers are not as likely to lose income from strikes over union security issues. A 2004 study confirmed that union membership density is significantly lower in right-to-work states in comparison to non-right-to-work states. The study also confirmed the belief that right-to-work states have lower wages overall in comparison with other states. 76

A 1986 right-to-work referendum (RTW) election was held in Idaho. Both sides waged extensive media campaigns and focused the debate on the issues of lower wages and growth in the Idaho economy. Whether someone should be forced to join a union became a peripheral issue in the campaign. The National Right-to-Work Committee had targeted Idaho since 1976, when it successfully pushed passage of the Louisiana right-to-work law. 77  Right-to-work states have several characteristics that differ from union shop states. These characteristics include (1) low union membership, (2) little heavy industry, and (3) a high level of agriculture. Idaho shared these characteristics with the 20 right-to-work states. 78

Union membership in Idaho was about 70,000 out of a population of one million. Idaho is surrounded by other right-to-work states: Wyoming, Utah, and Nevada. The referendum election was initiated by organized labor in an effort to overturn a 1985 law that was passed despite the governor’s veto and made Idaho the 21st right-to-work state. Opponents of right-to-work began their campaign with the message, “The real intent of right-to-work is to damage unions and lower wages for all Idaho employees—both union and nonunion.” Supporters of right-to-work pushed the message, “Should you be free to hold a job ... whether you belong to a union or not?” Each side then began to muddle the issues by bringing in actors from Hollywood—Charlton Heston for the right-to-workers, Patty Duke for the opposition. The final vote was in favor of retaining the new right-to-work law by 30,514 votes of the 385,324 total votes cast. 79

Research on Right-to-Work

How did the new RTW law affect Idaho? A 2002 study published by the Federal Reserve Bank of St. Louis concluded: (1) Idaho is “an interesting case study” because it was a late adopter of a RTW law and because it is bordered by three RTW states and by three non-RTW states; (2) a decline in the unionization within Idaho began in 1981, four years prior to the law, and continued after passage until now it is similar to the border RTW states, but this decline was significantly faster after passage of the law; and (3) Idaho realized a significant and constant growth in manufacturing after passage of the law, suggesting that the state became more attractive to plants in comparison with the rest of the region. 80  A 2005 report on wages in Idaho for the 15-year period following the 1985 passage of its right-to-work law concluded that the wages of nonunion workers in the state fell by 4.2 percent while the wages of union workers remained unchanged. This result supported the hypothesis that the law reduced the level of unionization and the wages of nonunion workers, resulting in an increase in the union–nonunion wage gap in the state. 81  In 2002, Oklahoma became the 22nd right-to-work state. Colorado might have become the 23rd right-to-work state in 2008, but voters rejected the ballot measure after a spirited fight by both sides. It was a “notable victory for organized labor” because it was the first defeat of a right-to-work movement in many years. Members of the Coors Brewing Company family were active on both sides of the issue, with the patriarch Bill Coors making a strong television commercial appeal saying about the measure, “I’m not for it.” 82

Court rulings and right-to-work states have had the effect of creating two new categories of employees: free riders and cheap riders. Free riders are employees who are in a unit represented by a union and are covered by a collective bargaining agreement but do not join the union. The collective bargaining agreement is binding on them, but they may not have any influence over its creation. Because unions are prohibited from negotiating union-shop and agency-shop agreements in right-to-work states, these states tend to have more “free riders,” which pose a problem for unions because they cannot collect dues from them but must provide them the same benefits as union members. 83  Cheap riders are employees who, again, are covered by a collective bargaining agreement but are not union members, but they are required to pay something to the union for the bargaining and representation services they receive. The share employees pay under union and agency shops where nominal membership or financial support is required ranges from 20 to 85 percent of a regular member’s dues.

Free riders

Employees within a bargaining unit who choose not to join the union that bargains for an agreement for the unit. Although the employees receive all negotiated benefits, they pay no costs associated with the union.

Cheap riders

Employees within a bargaining unit who choose not to join the union that bargains for an agreement but are required to pay a fee to the union to provide their share of the costs associated with negotiations (usually 80 to 85 percent of the regular union dues).

Table 6-2

Length of Contract Term (2009 Contracts)

Duration in Years	% of Contracts
1	11
2	20
3	42
4 or more	27
	100% all contracts

Source: Adapted from Bureau of National Affairs, 2010 Source Book on Collective Bargaining (Washington, DC: Bureau of National Affairs, 2010), p. 180. Copyright © 2010 by The Bureau of National Affairs, Inc., Washington, DC 20037. Used by permission.

Length of the Collective Bargaining Agreement

A contract must run for a specific term. Most contracts contain renewal provisions, with prior notice of termination or of a time for reopening negotiations. Contracts can have  opener clauses  that allow for negotiations to proceed during the term of the contract on one or more items, generally wages.

Opener clause

A clause in a collective bargaining agreement that allows negotiations to take place during the term of the contract on certain mandatory items, such as wages or insurance coverage.

A majority of contracts (about 69 percent) contain three-year terms or more, as shown in  Table 6-2 . The NLRB in a general ruling that extended the contract bar rule (see next section) to a three-year period aided the increase from one-year to three-year terms for most contracts. 84  In recent years, the number of contracts with periods extended to four years or more has steadily increased to 25 percent, up from only 5 percent in 1986. The desire by both union and management negotiators to provide greater long-term stability in labor relations has motivated negotiators toward longer multiyear agreements. 85  For example, Yale University and the Hotel Employees and Restaurant Employees International Union signed an eight-year agreement, the longest in the history of the university. The new agreement followed a bitter strike that closed down the center of New Haven, Connecticut, and resulted in 100 arrests. Richard C. Levin, president of Yale University, said he hoped the longer term of the agreement would provide “time to build a more cooperative relationship.” 86  In a similar private sector example, in 2009, Harley-Davidson workers agreed to a seven-year contract to preserve their jobs, and management gained a long-term peaceful workforce.

Management Rights

The area of labor relations known as management rights has evoked more emotion and controversy than any other single issue. At the core of the debate is the concept of management’s right to run the operation versus the union’s quest for job security and other protections for its members. 87  Management rights provisions are found in almost all contracts in a section labeled management rights. Union rights are often considered to include those negotiated rights scattered throughout a contract according to subject matter. 88

Of course, the question of who controls the workplace is of great interest to both management and labor. Management rights generally include decisions governing the working environment, including supervising the workforce, controlling production, setting work rules and procedures, assigning duties, and using plant and equipment. Management generally believes that if it is to operate efficiently, it must have control over all decision-making factors of the business. Management usually contends that any union involvement in the area is an intrusion on its inherent right to manage. Union advocates respond that where the right to manage involves wages, hours, or working conditions, labor has a legal interest under federal law. 89  Arthur Goldberg, former secretary of the Department of Labor and Supreme Court justice, summarized the management rights issue like this:

Somebody must be boss; somebody has to run the plant. People can’t be wandering around at loose ends, each deciding what to do next. Management decides what the employee is to do. However, the right to direct or to initiate action does not imply a second-class role for the union. The union has the right to pursue its role of representing the interest of the employee with the same stature accorded it as is accorded management. To assure order, there is a clear procedural line drawn: the company directs and the union grieves when it objects. 90

A management rights clause often appears at the beginning of a contract following the union recognition and security clauses. Here is an example of a common management rights clause:

Article 5

Management Rights

The management of the business and the direction of the working forces, including the right to plan, direct and control store operations, hire, suspend or discharge for proper cause, transfer or relieve employees from duty because of lack of work or for other legitimate reasons, the right to study or introduce new or improved production methods or facilities subject to the provisions of Article 20 of this Agreement, and the right to establish and maintain reasonable rules and regulations covering the operation of the store, a violation of which shall be among the causes for discharge, are vested in the Employer; provided however, that this right shall be exercised with due regard for the rights of the employees, and provided further, that it will not be used for the purpose of discrimination against any employee or for the purpose of invalidating any contract provision. 91

Reserved Rights

In addition to explicit management rights specified in the contract (as illustrated in the example), there are also residual, implied, or  reserved rights  not found in the language of the agreement. The reserved rights theory generally contends that management retains all rights except those it has expressly agreed to share with or relinquish to the union. 92  Management, under the reserved rights concept, does not review the agreement to determine which rights it has gained but instead reviews the agreement to ascertain which rights it has conceded to labor. All rights remaining reside with management. 93

Reserved rights

The generally accepted contention that all rights not specified in an agreement or shared with a union remain the unwritten or implied rights of management.

One area of management rights that has received a great deal of attention since the 1980s involves a management decision to relocate its operation, in whole or in part. Previous Supreme Court decisions had decided that if a company planned to “subcontract” work currently being done by union workers, that decision was a mandatory bargaining subject. 94  However, if the company was deciding to close down part or all of its operation, such a decision was not a mandatory bargaining subject. 95

The NLRB, therefore, first likened management’s decision to relocate part or all of its facility to the decision to close a plant, and it ruled in Otis Elevator Co. that relocating was not a mandatory bargaining subject. 96  After the federal court rejected that comparison, the NLRB, in Dubuque Packing Co., 97  compared relocating to subcontracting and reversed itself, deciding it was a mandatory bargaining subject. 98

Restricted Rights

Restrictions of management rights are common in contracts (87 percent) as union negotiators strive to delineate the union’s rights in specific areas of decision making. Contracts may contain these  restricted rights  in a general statement restricting management from “taking actions in violation of the terms of the agreement.” Specific restrictions of management rights or, conversely, the providing of union rights are most often found in the following contract clauses: 99

Restricted rights

Contract provisions that place specific limitations on areas generally considered management rights.

· Subcontracting of work to outside firms (contained in 55 percent of all contracts)

· Supervisory performance of bargaining unit work, except for training, in an emergency, conducting experiments, and developing new products (58 percent)

· Technological changes in work methods or equipment (e.g., robots) without union approval or the retraining of displaced workers (26 percent)

· Plant shutdown or relocation without advance notice and transfer rights to a new location (23 percent)

· Union rights of access to bulletin boards, pertinent information, and company premises (94 percent)

Grievance and Arbitration

Most contracts provide for the machinery necessary to enforce the terms of the agreement. Union shop stewards and officials give on-the-job representation that includes grievance administration (see  Chapter 11 ). External enforcement is provided through arbitration provisions.

Contract Bar

Through its decisions over the years, the NLRB established a  contract bar  doctrine stating that a current and valid contract can prevent another union from petitioning for an election and being certified as the exclusive representative. The board developed this doctrine as a balance between two competing interests under the National Labor Relations Act: the right of employees to choose their bargaining representatives and the need to achieve stability in labor relations through negotiation of collective bargaining agreements.

Contract bar

The general rule followed by the National Labor Relations Board stating that a current and valid labor contract can prevent another union from petitioning for an election and being certified as the exclusive representative for the term of the existing contract.

It is the NLRB’s theory that if a union has negotiated and signed an agreement on behalf of its members, another union should not be allowed to seek recognition during the life of that agreement. Certain elements must be present to ensure that the contract acts as a bar to a representational election:

1. The contract must be in writing and signed by the parties. An oral agreement cannot be a bar.

2. The contract must be for a fixed term. An indefinite term expiring on some happening in the future cannot bar an election, nor will the board honor a contract with an unreasonably long term. Currently, the NLRB views a three-year contract as reasonable. Any contract of longer term will not bar an election to change representation at the end of the three-year period.

3. The contract must provide substantive terms and conditions to ensure a stable employer–employee arrangement. If a contract covered wages alone, it probably would not operate as a bar.

4. The contract must be duly ratified if ratification by the membership is required.

5. The contract must contain only legal provisions. Clauses that discriminate on the basis of race, religion, and so on, or that clearly violate union security provisions of the act cannot bar a new election.

6. The contract must not be prematurely extended. The NLRB allows employees the right to change representation during the  open period  —the first 30-day period in the 90 days before termination of the original contract.

Open period

The first 30-day period in the last 90 days before the termination of a collective bargaining agreement during which employees can vote to change their bargaining agent.

A 1996 case provides an example of the right to change representation. The Supreme Court unanimously ruled that an employer had violated  Section 7 ) of the National Labor Relations Act, which protects the union’s rights, when the employer disavowed a contract. The union in the case had accepted the company’s last contract proposal, but the employer disavowed the contract the next day because 16 (of 23) employees had complained about the union, and 13 had resigned from the union. The Court ruled that to preserve industrial peace and stability, the NLRB presumes that a union has majority support during the term of any contract, once negotiated, up to three years. Only at the end of the contract, during the open period, can employees seek to change representation. 100

Under the contract bar doctrine, if a rival union wants to win the bargaining rights of a unit, it must petition for an election and win it during the open period—that is, between the 90th and 60th day prior to the contract’s expiration. Once the end of an open period arrives without the filing of a petition, the incumbent union becomes insulated from another union’s petition, and if a new agreement is reached before the old one expires, the new one presents a new contract bar. 101

Once contract negotiations begin, the employees cannot petition for a change in representation. This  insulated period  begins 60 days before the contract is due to expire. Therefore, negotiations must not take place during the open period so that employees will have an opportunity to change representation.

Insulated period

The last 60 days before a collective bargaining agreement is due to expire in which the existing bargaining agent cannot be subject to an employee vote to change bargaining agents.

Bargaining in the Public Sector

For many of the reasons discussed in  Chapter 3 , negotiating a collective bargaining agreement in the public sector differs in significant ways from negotiating in the private sector: the nature of public employment as providing essential services with no real competition; the source of funding coming from taxpayers and not consumers; working at the direction of “elected” managers who report, ultimately to citizens; and limitations on negotiable issues. These differences certainly influence the context of contract negotiations. However, fundamental ideas regarding bargaining theories and the bargaining process in the private sector generally hold true for the public sector with a few important variations.

Multilateral Bargaining

In the private sector, union negotiators derive their authority to negotiate from their membership. That authority is generally limited in that the contract must be taken back to the membership for a vote. However, management negotiators in the private sector have the authority to commit to a negotiated agreement at the bargaining table. This situation is often referred to as bilateral bargaining. In the public sector, where management’s authority to negotiate flows from the people, the decision cannot generally be made by one official and is referred to as multilateral bargaining. In a multilateral bargaining situation a third party such as a city council must approve the tentative agreement negotiated by management.

Press Interest

In the private sector there is press coverage of strike threats or actual strikes, but while the negotiations are being carried out, they are largely confidential. Public employee collective bargaining makes news even when there is no crisis. Press coverage can harm the bargaining process in several ways. If an impasse is reached, the parties may try to explain their side to the media, hoping to influence public opinion and in turn the negotiating process. Rushing for media coverage may cause a party to present proposals publicly before it has presented them to the other party at the negotiating table. By emphasizing the differences between the parties instead of the points of agreement, reporters can actually prolong the stalemate. When public employees and their employers reach agreement, it is not newsworthy; therefore, media coverage is often confined to reporting on the items separating the parties and not the items of agreement. Coverage reinforces the bad feelings too often present in negotiations in a way the private sector rarely experiences.

Sunshine laws

Some states require public bodies, such as city councils, to conduct their official business in public sessions open to citizens and the press. Some initial posturing is necessary on both sides so that the negotiator’s constituency is assured that he or she is acting on their behalf. Negotiators may find it difficult to stop posturing if they are under constant scrutiny. At any particular juncture during the negotiation process, it may seem as if one side or the other is winning or losing. A fear of “loss of face” by either side may endanger the fair compromise so necessary to successful negotiations.

No Right to Strike

In the private sector, an impasse in collective bargaining negotiations can result in a strike. In the public sector, the right to strike is usually denied to the public employee either by the collective bargaining statute or by court actions. As discussed in  Chapter 3 , the right-to-strike issue is to the public sector what the right-to-work issue is to the private sector. Despite the traditional bias against public employees’ right to strike, some states allow public workers to strike either directly or by not prohibiting it. 102  In 1981, in a very pivotal case, PATCO (Professional Air Traffic Controllers) leaders called the first declared national strike against the federal government. The 13,000 strikers thought they were irreplaceable. President Reagan quickly warned that such direct disobedience of the law against public employee strikes would not be tolerated. He stated, “There is no strike; what they did was to terminate their own employment by quitting.” 103  Reagan gave workers a deadline that most ignored; then he fired all but the few who returned to work. Not one controller was given amnesty or rehired until President Clinton took office in 1993.

The success of the Reagan administration in replacing such highly skilled workers, together with widespread public support, left little doubt in the minds of government workers as to what might happen if they went on strike. PATCO miscalculated its ability to gain concessions by striking. And the PATCO strike without question began a new era in both public and private sector labor relations, one in which employers view permanent replacement workers as a serious option to striking union workers.

Resolving an Impasse

Legislation that allows public sector collective bargaining but prohibits strikes often details the procedures available to resolve an impasse, usually, mediation, arbitration, and fact-finding. As with the private sector, the mediator has no independent authority but uses acquired skills to bring the parties back together and reach an agreement. Mediation may be provided by the Federal Mediation and Conciliation Service (FMCS), state labor departments, or local mediation boards.

Fact-finding and advisory arbitration can be far more successful in the public sector than in the private because of political pressures. Under fact-finding and advisory arbitration, an unbiased third party examines the collective bargaining impasse and issues findings and recommendations. The findings may move the process simply by eliminating the distrust one party feels for the other party’s facts or figures. Reasonable recommendations may also pressure a party to accept an offer that otherwise would not have been considered.

Interest arbitration allows a panel to make a final and binding decision on a negotiation dispute and has been used in the public sector to resolve impasses. However, the legality of allowing a third party to set the terms of the contract has been questioned. 104

Summary

Individuals representing labor and management are involved in the collective bargaining process. Negotiators prepare for the negotiations, set priorities, and proceed in an honest and thorough manner. The National Labor Relations Act delin-eates areas of mandatory, permissive, and illegal negotiations. A good negotiator must also understand and value the human element, which is an integral part of the negotiating process. For some parties, the give-and-take relation is as important as the end result. Knowing that, although every demand was not met, the position and point of view at least being heard by the other party can be part of a successful negotiation. 105

When the collective bargaining process breaks down, an impasse is reached. The parties can react to that impasse in various ways. Strikes are the most widely publicized reaction. Most often, however, mediation, arbitration, and fact-finding are used to resolve impasses.

When the parties reach agreement, they reduce that agreement to writing. Some of the key provisions that are a part of most collective bargaining agreements include union security, management rights, as well as the wages and benefits.

Public sector negotiations differ in a number of ways because of the nature of public employment and the responsibility the public employer and employees have to members of the public they serve.

Case Studies Case Study 6-1 Surface Bargaining

The company was charged with an unfair labor practice for failure to bargain in good faith. The union alleged that the company was engaged in surface bargaining with no intention of entering into a collective bargaining agreement. The company had begun meeting with the union after the NLRB had certified it. Eighteen bargaining sessions were held over an 11-month period. The negotiations did not result in a contract. The parties did reach agreement on a recognition clause; the numbers, rights, and duties of union stewards; the use of a bulletin board by the union; pay for jury duty and other leaves of absence; a procedure for processing grievances and arbitrations; and plant visitation by union representatives.

The administrative law judge hearing the case found that the company met at regular intervals and bore no antiunion animus. The company’s conduct away from the bargaining table did not indicate that the company had no intention to conclude an agreement with the union. As there was no evidence of a failure to meet to discuss terms and conditions, the arbitrator had to examine the proposals by the company and by the union to see whether their substance indicated good-faith bargaining. The company’s proposals are briefly outlined as follows:

1. Wages.  The company insisted that it remain in total control over wages. Wage increases were to be determined on the basis of semiannual merit reviews, in which the union would have no participation. The union had proposed a specific wage schedule, but the company would not adopt it.

2. Management rights.  The company retained absolute right to subcontract work, to assign it to supervisors, to abolish jobs, and to transfer, discontinue, or assign any or all of its operations to others. It required the union to relinquish the employees’ statutory right to notice in bargaining over such actions and their effects. Actions taken under the management clause were subject to the grievance procedure only if that right was limited by express contract provision, and there was no such limitation.

3. Zipper clause.  The company proposed a zipper clause, which waived the union’s right to bargain during the life of the agreement over anything that could have been considered mandatory or permissive under existing law.

4. No-strike clause.  The company proposed a no-strike clause, including prohibition against a strike for unfair labor or unfair employment practices.

5. Discipline and discharge.  The company rejected the union’s proposal of a standard right to discipline an employee for “just or sufficient cause only.” The company intended to reserve exclusive authority over discharges and discipline in the management rights clause.

6. Layoff and recall.  The company proposed that the layoff and recall of employees would be at the company’s sole discretion.

7. Dues check-off. The company rejected a union proposal that a dues check-off clause be included in the contract.

8. Nondiscrimination clause.  The company rejected a union proposal that stated the company was not allowed to discriminate against union members. The company’s position was that because discrimination was illegal, a clause forbidding it did not need to be included in the contract.

Source: Adapted from A-1 Kingsize Sandwiches, 112 LRRM 1360.

Questions

1. Was the company bargaining in good faith? Explain your answer.

2. Which company proposal was the most important in determining the “in good faith” issue?

3. Suggest how principled negotiations techniques could be used in this case.

Case Study 6-2 Impasse in Negotiations

For more than 20 years, the Union has been the exclusive bargaining representative of production and maintenance employees of the Company. The most recent of a series of collective-bargaining agreements expired on February 28, 2006. The union representative requested certain information from the Company by letter in anticipation of upcoming negotiations, which the Company provided. For the Company the high cost of health insurance was, from the first negotiation session, a major issue. The Union presented a comprehensive contract proposal that dealt with most terms and conditions of the expired contract, including its proposal to eliminate the “right to change” provision under the “Medical-Hospital-Physician” clause of the expiring contract. The Union’s position was that this change was necessary to prevent the Company from reducing its health care plan benefits during the term of the contract.

The Company gave the Union information on the costs incurred by the Company for the employee’s health insurance and brought two representatives from a new insurance carrier to present their plans at a negotiation session. The Company’s position was clear: Current health care costs were excessive, and the negotiations depended on reaching agreement on an acceptable insurance policy. At the third negotiating session, the Company presented additional and detailed information on health care costs, a contract proposal for the renewal of the current agreement, and a new comprehensive medical plan offered by the new provider. At their fourth session, the parties continued to discuss the alternatives to the employees’ medical insurance. The Union adhered to its position that the current plan/provider be retained, and the Company submitted more information to the Union about the new plan. In the meantime, the Company had presented the Union, in advance of the session, with detailed information about the two health insurance plans, sending comparative charts showing monthly costs under the old and proposed plans, detailed charts showing covered medical services, deductible expenses, and prescription drugs. The Union acknowledged that the benefits offered by the new plan were similar to those under the existing plan, but again stated that proposal was unacceptable. The Union proposed again that the “right-to-change” language be taken out of the contract. When the parties next met, the Company agreed not to make substantial changes in the level of health benefits and to discuss any changes with the Union before implementing them, provided the Company retained the right to change insurance carriers. The Company’s proposal also reflected improvements on other terms, such as wages and grievance procedures. The Union insisted again on eliminating the “right-to-change” provision contained in the expired contract.

At the next session, the Union finally expressed acceptance of the new insurance plan, provided that the current benefits be retained. To ensure this, the Union insisted that the “right-to-change” language of the old contract be deleted. The Company presented its final offer for renewal of the labor agreement, which contained better and enhanced terms, especially an increase in wages and an improved split on health care premium costs between the Company and the employees. The Company expressed hope that the Union would submit the package to its membership for approval. Instead the Union requested additional information on the Company’s cost of the final proposal and promised to examine the Company’s final offer and submit a counteroffer. The Company showed the Union another monthly cost comparison for each employee under the two health insurance plans but also stated that any counterproposal by the Union greater than the Company’s final offer would underscore the current impasse in the negotiations. It advised the Union that the new provider had offered a reduction in rates, effective May 1, 2006, which would not be extended to June 2006 and requested the Union’s approval of the implementation of the new health care plan as a substitute for the current plan.

In response, the Union informed the Company by letter it was not interested in agreeing to the implementation of the new health care plan and that the Union needed additional information for further negotiations. In addition, the Union charged that the Company’s position to retain “the right-to-change” insurance benefits during the life of the contract amounted to an unfair labor practice.

The Company provided the Union with the additional information, but informed the Union that in light of the existing impasse in the negotiations, it would implement the new health care plan from May 1. The Company stated that one reason for the “impasse in the negotiations” was the Union’s insistence on deleting “the right-to-change language” and to condition its acceptance of the health plan on that proposal. The Union filed an unfair labor practice charge against the Company.

Discussion

An employer’s unilateral change to a mandatory subject of collective bargaining, such as health insurance, during the course of a collective-bargaining relationship is unlawful. A recognized exception to this rule is when an impasse is reached. The issue in this case is whether the parties have reached a lawful impasse. A party that prematurely declares an impasse and makes unilateral changes in, for example, health care coverage violates the act. Whether or not an impasse is reached is a question of various factors including (1) the background and relationship of the parties, (2) their willingness to negotiate, (3) the extent and frequency of bargaining, (4) the integrity of the bargaining, and (5) the good or bad faith of the parties. Here, the parties had a well-established and successful bargaining relationship, as exemplified by a series of collective-bargaining agreements. The parties’ willingness to negotiate is shown by the Company’s cooperation in agreeing to set dates and in attending meetings. Both parties presented proposals based on the expired contract and made concessions. The Company furnished detailed information, especially on the health insurance plan, and gave serious consideration to the Union’s proposals.

The integrity of the bargaining was shown by the sincerity of the parties in attempting to arrive at an agreeable solution to their differences. There is no dispute that the Company was faced with increasing cost of the existing health plan and tried to involve the Union from the outset in the negotiations, by supplying financial information, by presenting insurance representatives, and by making significant concessions.

Finally, as to the good faith of the parties, it is clear that the parties were deadlocked on two issues and unable to overcome their differences. At one point the Union had indicated its acceptance of the new health plan after the Company had agreed to substantially identical benefits with those of the existing plan, but the Union changed its position and rejected the Company’s request to accept the proposal. The record suggests that the Union conditioned its acceptance on the elimination of “the right-to-change” language. That issue was never resolved, although the parties had come close to an agreement at one point on the health plan. The parties resumed negotiations with revised proposals on two occasions but were unable to overcome their fundamental differences and remained deadlocked. A deadlock on certain issues does not free an employer to implement changes to the terms of an agreement, unless an overall impasse is reached. An overall impasse is reached if it is clear that further meetings would not be productive.

Source: Adapted from Clarke Manufacturing, Inc. and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 2–200, 352 NLRB No. 25 (2008).

Questions

1. Would the Company’s willingness to share financial information on the health care plans with the Union help the board decide whether there was an impasse? Explain.

2. What other options were available to the parties to break the deadlock in these negotiations?

3. What would be the effect on the bargaining relationship between these two parties if the board finds that a legal impasse had occurred? If the board finds that a legal impasse has not occurred?

 You be the Arbitrator School Bus Drivers

Article VII

Management Rights, Item E

Maintain the efficiency of operations in the New Lebanon School District and the personnel by which such operations shall be carried out.

Article VII

Management Rights, Item F

Exercise any other power or prerogative given it under the Revised Code of the State of Ohio or any reasonable inference to be therefrom.

Article XXXI

Transportation, Paragraph H

All field trips shall be offered on the basis of seniority rotation as follows:

1. There shall be two rotation lists made containing the names of all drivers in order of their seniority (those drivers only desiring to take field trips), the most senior driver being No. 1. One list will consist of daytime trips; the other after school and weekend trips.

2. The first trip of the school year shall be assigned to driver 1. The second being assigned to driver 2 and so on. Driver 1 shall not be eligible for another field trip until all the remaining drivers have had an opportunity to take a field trip on each individual rotation list.

3. If more than one field trip is offered on Monday (or whatever day), driver who is up for the next trip on the seniority list may have their choice of field trips; next drivers will have the same option until all trips have been exhausted.

4. Any driver becoming eligible may have the option to refuse the trip to be passed over in favor of the less senior driver. However, the driver refusing shall not be eligible again until the rotation is complete. There will be no trading of field trips.

5. Field trips shall be assigned to regular classified bus drivers only. In the event that the rotation has been exhausted and no regular drivers are available, the substitute drivers shall be permitted to take field trips.

6. Only classified bus drivers that are contract drivers with the Board shall be assigned to any route or extra trips.

7. When a field trip requires early departure and last all day or overnight, regular school bus drivers will have the option of taking the trip. The school bus drivers will drive their own bus on the trip or the best available. The Supervisor may assign any bus from the fleet to a field trip which is more than 100 miles one way. The regular bus drivers will relinquish their regular pay rate for the field-trip rate. Field trips will stay on the same rotation basis.

8. If drivers have a field trip canceled, they will be offered the first field trip from the same list (either day or after school) as long as they do not have another field trip assigned. Should they already have a field trip assigned, they will be offered the next field trip available. Receiving the makeup trip cannot cause one to lose a trip from the normal list.

9. Every effort will be made to provide drivers with a gas card to those assigned field trips that are beyond a 100-mile round trip.

10. When a field trip is available and after exhausting the regular rotation field trip list and substitute list, that trip becomes an “emergency field trip” situation. Under the earlier stated guidelines, regular and/or substitute bus drivers may take the participants to the field trip event and return to the school district. At the completion of the field trip, the same driver or an alternate driver may be assigned to pick up these participants and return to the school district; the driver being paid for the time needed to accomplish this.

11. Summer Field Trips/Summer School—For the purpose of determining the rate of pay, a summer field trip is defined as transporting students with a teacher/advisor/designee in charge, and the driver of this trip will be paid FIELD-TRIP RATE. Summer school transportation is defined as transporting students to a school or designated area where the driver has the same responsibility as transporting students to school during the regular school day (no adviser/coach/designee in charge), and the driver of this trip will be paid the REGULAR DRIVING RATE for which they are employed.

Facts

The employer is a public school district. In the past, the superintendent of the district had used his private van to transport students to sporting events. After the district purchased a van, the school van was used to transport students to sporting events. The union grieved the use of the van because the school bus drivers were not being used to drive the van, and the collective bargaining agreement (CBA) required the school bus drivers to drive students on any field trips.

Issue

Did the employer violate its CBA that requires school bus drivers to transport students on field trips when it did not require them to transport students to sporting events?

Position of the Parties

The school district’s position was that the CBA’s management rights clause gave the superintendent the authority to determine what vehicles to use to transport students when the trip is not a field trip. If the superintendent does not determine that a school bus should be used, then the CBA’s provision is not applicable. The CBA does not define “field trip,” so “field trip” is defined in the school district’s policy as “any planned journey by one or more students away from district premises, which is under the supervision of a professional staff member and an integral part of a course of study.” Under the district’s definition, no sporting or after-school trip is a field trip.

The union’s position was that the drivers should be assigned to drive the van whenever school trips are being taken. Even though the CBA does not define “field trip,” the union does not accept the use of the definition in the district’s policy or the narrow reading of the term “field trip.” Any trip taken under the auspices of the district is a field trip for purposes of the CBA.

Source: Adapted from New Lebanon Local Bd. of Ed., 114 LA 952 (Arb. 2000).

Questions

1. As arbitrator, what would be your award and opinion in this arbitration?

2. Identify the key, relevant section(s), phrases, or words of the collective bargaining agreement (CBA), and explain why they were critical in making your decision.

3. What actions might the employer and/or the union have taken to avoid this conflict?