Collective Bargaining - Module 4 of 5

Module 4: Collective Bargaining

Collective bargaining is a negotiation process that occurs between an employer and a labor union representing the workforce as a collective. The parties come to the negotiating table with the goal of coming to an agreement on the terms and conditions of employment in the workplace. If negotiations succeed, they often result in the execution of a collective bargaining agreement. The National Labor Relations Act governs how employers and unions negotiate during collective bargaining discussions. However, there are several other laws, implementing regulations and judicial decisions that dictate the form and function of collective bargaining in the modern workplace.[1]

Union Representation in Collective Bargaining

Employees within a given workforce have a common interest an ensuring a safe and beneficial employment arrangement. Rather than leaving employment negotiations up to individual workers, collective bargaining unifies the common interests of employees across the workforce into a cohesive and powerful negotiating unit.  

Over the course of collective bargaining, unions act as the legal representatives of the workforce. The union advocates for the employees’ collective interests. Because the employees themselves are not present, however, the law limits the scope of union authority in the collective bargaining process.   

Union representatives are permitted to waive certain employee rights as a bargaining tool to gain concessions in collective bargaining agreements. For example, unions may waive employees’ rights to bargain over future terms of employment or may agree to terms that allow management to adjust key provisions in agreements unilaterally under certain conditions. However, a union may not negotiate away workers’ rights to engage in concerted activities, though the ability to negotiate a no-strike clause offers a limited exception to this prohibition. No-strike clauses are terms found in some collective bargaining agreements that limit the unions’ abilities to engage in strikes, walkouts or other actions that would disrupt production.[2]  

After the negotiations are over, the union is tasked with monitoring and enforcing the collective bargaining agreement to ensure that the company or employer is following the agreed terms.[3]

To help ensure collective bargaining negotiations proceed effectively, the National Labor Relations Act imposes certain responsibilities on both unions and employers. First and foremost, the law requires parties to a collective bargaining negotiation to bargain in good faith.

The good faith bargaining requirement imposes a responsibility on all parties to be open minded and sincere when discussing the issues.[4] Of course, the law does not require anyone to agree to any specific terms but applies to the manner and process of the negotiations. For example, the law requires parties to comply with sensible requirements like meeting at reasonable times, providing requested documents completely and timely and discussing all necessary and proper subjects of a collective bargaining agreement.[5]  

Beyond requiring parties to negotiate in good faith, the Act affords additional protections to unions to ensure that the bargaining starts off fairly. For example, employers are in violation of federal labor laws if they don’t negotiate in person; negotiating by exchange of letters of emails is insufficient.[6] The law also gives unions the right to access certain information held by employers to which a typical employee would not have access. This includes financial records, health and safety inspection records, accident reports, company manuals and guides (with rules and policies), investigative reports and data sheets.[7] A union can also request to view documents that support any claims the company makes, such as the wage scale for employees and the company’s financial situation as it pertains to its ability to increase wages.[8] The right to this information is granted to unions, not individual workers, to help the collective bargaining process move forward fairly without unreasonably compromising workplace privacy.

The Collective Bargaining Process

The National Labor Relations Act regulates the administration of collective bargaining agreements, labor dispute resolution, and provides guidance regarding the interpretation of collective bargaining agreement language and enforcement of substantive terms.[9]  Collective bargaining negotiations are tailored to suit the needs of a specific company and its employees, but they tend to proceed according to a standard process.

The typical process starts with a group of employees who perform similar work coming together to change a work-related issue. These workers can be from different companies as long as they hold similar positions and are members of the same union. These groups are commonly known as “bargaining units,” and are represented by a single union when dealing with employers.[10]

Once union representation is formalized, most collective bargaining processes begin with informal fact-finding. The parties exchange relevant information that must be disclosed as a matter of law and confer about how the bargaining will proceed. This may include gathering insight from supervisors, managers and employees.[11] In addition, the Act establishes guidelines regarding topics that must be discussed, topics that may be discussed and topics that may not be negotiated by law. Mandatory subjects include wages, hours, benefits, workplace rules and discipline.[12]

The Act also provides representatives with information on how to prepare for and undertake negotiations, and even provides guidance on common clauses and terms used in collective bargaining agreements. However, the most successful negotiators have the ability to resolve differences and use problem-solving techniques. They also should possess the emotional, political and tactical bargaining skills necessary to reach a mutually amenable collective bargaining agreement. Usually, the union and employer conduct multiple rounds of negotiation before coming to a consensus. Collective bargaining agreements memorialize the terms and conditions on which the parties  agreed.[13]

Collective Bargaining Agreements

Collective bargaining agreements set out terms and conditions that bind both employers and employees. A typical bargaining agreement lays out pay scales and other benefits of employment, including vacation, sick leave, working hours and workplace conditions. Wages and benefits are often more favorable to employees in collective bargaining agreements than employees without union representation. In fact, wages of employees covered by collective bargaining agreements are 30 percent higher on average than workers who do not have union representation.[14] Additionally, about 93 percent of union workers have private health benefits, compared with only 69 percent of non-union workers. Retirement benefits are also a common topic in collective bargaining, and, as a result, an estimated 77 percent of union workers have guaranteed pensions, compared with only 17 percent of non-union workers.[15]

Beyond securing favorable wages and benefits, collective bargaining agreements can provide workers with a greater breadth of workplace rights than what is required by state or federal law. Rights not covered under state or federal law, but commonly found in collective bargaining agreements, include seniority-based hiring criteria, fair workplace grievance and arbitration procedures, vacation and leave benefits and retirement benefits.

For example, most employees work on an “at-will” basis, meaning that they can be fired at any time for any cause not prohibited by law.  However, collective bargaining agreements often require the employer to show just cause for any disciplinary actions taken against an employee. Employers have the burden of proof upon firing or disciplining employees, which ensures that employees are given due process when facing termination or disciplinary actions. These processes also give workers the chance to defend themselves against workplace practices that may be unlawful, discriminatory or arbitrary. Labor unions participate in these procedures to help make sure that due process is upheld and that employees are treated fairly.[16]

Beyond providing for proper due process, collective bargaining agreements also mitigate the risk for workers in the event of major corporate changes. It is common for collective bargaining agreements to include protections for employees when the company is restructured, bought out or merges with another business. Collective bargaining agreements can also limit the amount of work or number of labor hours that a company can outsource. Indeed, they can include any terms and conditions not prohibited by law, so they vary greatly from workforce to workforce. Collective bargaining agreements also often include dispute resolution clauses.  

The collective bargaining agreement is set for a specified period of time. When the agreement expires, the labor union and employer can extend the old one (with our without modifications) or go back to the drawing board to negotiate a new collective bargaining agreement.[17] Depending on how circumstances had evolved during the administration of the preceding agreement, the parties may return to the negotiating table with a fresh set of facts driving their interests. Given the time and resource-intensity required for this process, the fact that agreements must be renegotiated at the end of each contractual term is a disadvantage to the collective bargaining process.

Challenges in Collective Bargaining

Collective bargaining can be successful and beneficial if both sides come to the table with good faith bargaining, ethical strategy and a collaborative mind set. However, it does not always conclude with a favorable outcome, as there are significant costs associated with the negotiation process, the finalization of the collective bargaining agreement and ongoing contract administration and enforcement. For the employer, this often translates to a potential loss in productivity and profit. For the union, it typically means reaching out to its members for voluntary support.

Union members who choose to become representatives may be required to work outside of regular work hours. This is particularly true during the negotiation process, which requires the engagement of the majority of union members. Union representatives are responsible for voicing the concerns of a large group of people. This will inherently require compromise, and some individual interests may get lost in the will of the majority, which can undermine trust within organizations. As a result, union representatives may face particularly trying demands while the union is engaged in collective bargaining negotiations.[18]  

Employers face their own set of administrative and organizational challenges when engaging in collective bargaining negotiations. When negotiating with a workforce as a whole, employers are dealing with a degree of uncertainty that can threaten the wellbeing of their businesses. Each union negotiates based upon the priorities of its members, which can vary substantially. Furthermore, modern businesses are dealing with changes in tax law and other policies that are affecting collective bargaining agreements already in place. For example, the Affordable Care Act imposes a 40 percent excise tax on employees with comprehensive insurance plans provided by their employers, which is a common benefit found in collective bargaining agreements. This so-called “Cadillac tax” is meant to help equalize access to healthcare, but in the long-term it is almost sure to impact collective bargaining over healthcare benefits.[19]

Collective bargaining is an effective means of increasing the negotiating power of individuals in a given workforce. However, collective bargaining agreements can also place employers and union members into unfavorable conditions by locking in employment terms over the long-term. This is particularly true as technology continues to evolve in the modern workplace, changing the skill and human resource requirements of workforces around the world. For example, the Teamsters Union is responsible for negotiating collective bargaining agreements on behalf of millions of workers in the transportation industry. Commercial transportation is being permanently changed by autonomous vehicle technologies, which will affect job safety, wages and opportunity.[20] Exactly how technological changes will impact collective bargaining in this and other fields remains to be seen, but suffice it to say that the accelerating integration of workplace technology is permanently changing the landscape of collective bargaining.  

While advanced technologies like self-driving cars raise novel issues for those working in transportation, the tension between labor and technology is nothing new. Labor advocates successfully organized Wisconsin’s migrant workers in the pickle-producing industry into a labor union in 1967, and the new union began the arduous process of formalizing a collective bargaining agreement. Before the negotiations were finalized, employers eliminated all these jobs by replacing them with mechanical harvesters.[21] While this is an extreme example of a failed attempt at collective bargaining, there are numerous barriers to collective bargaining posed by the challenges associated with the process.

Collective Bargaining Failures

The direct and indirect costs associated with collective bargaining can steer a collective bargaining agreement off course, resulting in the execution of an agreement that nobody is truly happy with or in an impasse.  

If the parties find they have executed a collective bargaining agreement that should be modified, changes must be approved by a majority vote of covered employees. If employees vote to modify the collective bargaining agreement, they must provide the employer with proper notice and offer to meet and bargain again for a new or modified agreement. Unions are not permitted to engage in a strike or work stoppage to force the modification, and anyone who goes on strike to try to force the termination or modification of a collective bargaining agreement that is legally in force may be terminated.[22]  

If the sides are unable to come to an agreement after good faith efforts are made, they may declare an impasse. Labor laws provide the structure necessary for the collective bargaining process to move forward smoothly, but the parties are not compelled to reach an agreement during the negotiation process. In some cases, if they are unable to obtain a mutually acceptable outcome, they can invoke the contractual grievance-arbitration procedures and ask an outside neutral party to decide matters that are in dispute.[23]

Economic, legal, and technological shifts impact collective bargaining for unions and employers alike. Beyond the legal requirement to do so embodied in the National Labor Relations Act, it is in everyone’s interest to perform collective bargaining negotiations in good faith. Unions and employers have the same fundamental goal: building and maintaining a happy, safe and productive workforce. However, not even the best negotiators succeed all of the time. The next module discusses some of the common practices, rules and procedures developed to address circumstances when labor relations break down.