Details Matter in Collective Bargaining
When negotiating new labor union agreements, employers often focus only on the value of wages and benefits and assume that the remaining terms of the agreement—which may have been in effect for decades—can remain the same. However, when an employer decides that it needs to make moves that allow it to accommodate economic, technology, and business management changes, these seemingly inconsequential, yet overlooked, details can often stop the employer in its tracks. After 10 or more renegotiations of an agreement, there will often be orphaned clauses and terms. By orphaned, I mean there is no definition of what these clauses or terms mean in the collective bargaining agreement and, in many circumstances, those now responsible for overseeing the operation of the collective bargaining agreement no longer have a memory of what those clauses or terms were even meant to address.
It is a good idea for employers that may be renegotiating an existing collective bargaining agreement within the next year to have someone in the company review the agreement anew with an eye to the company’s goals for the future and the effect that long-existing terms or clauses in the contract might have on any plans for changes. While some may argue that the language of the collective bargaining agreement has never been a problem, and that there is no reason to “rock the boat” by raising such issues, management should never forget that a collective bargaining agreement is a contract—and like all contracts to which the company is a party—vagueness in the terms of the contract may undermine the company’s ability to operate as it wishes.
A good example of how seemingly minor details can matter in collective bargaining negotiations is demonstrated in the Silgan Containers Corporation case (decided in April 2016)1, where the company negotiated the transfer of its current pension plan to a 401(k) plan. The prior pension plan had a cap on contributions. In negotiating the change, that cap was never discussed and the employer forgot to include it in the collective bargaining agreement. When this mistake was discovered, the employer challenged the contract. The United States Court of Appeals for the Eighth Circuit did not rescue the employer from its mistake. Rather, it found the employer was a sophisticated party that had had an opportunity to read the agreement and that the union had done nothing to interfere with that ability.
When renegotiating collective bargaining agreements, make sure there are plenty of eyes from the company’s viewpoint on the drafts of the agreements. Make sure that there is a good record being kept of all changes in the agreement and proposals made by both sides. Collective bargaining agreements usually last three years, sometimes longer. This is a very long time to live with a significant mistake because the employer did not pay attention to the details in negotiations.
1Silgan Containers Corp. v. Sheet Metal Workers Int’l Ass’n, No. 15–1956, Local Union No. 2 (8th Cir. Apr. 15, 2016), https://media.ca8.uscourts.gov/opndir/16/04/151956P.pdf
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.