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Legal Requirements for Collective Bargaining PowerPoint PPT Presentation


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Legal Requirements for Collective Bargaining. Notification of Intent to Bargain: Warning period: Party wishing to terminate or modify an existing agreement must notify the other party at least 60 days prior to the date (90 days in the case of a health care institution)

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Legal Requirements for Collective Bargaining

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Legal Requirements for Collective Bargaining

Notification of Intent to Bargain:

Warning period: Party wishing to terminate or modify an existing agreement must notify the other party at least 60 days prior to the date (90 days in the case of a health care institution)

Parties must notify FMCS within 30 days of the initial notification of the intent to terminate or modify.

Union cannot strike during the 60-day period. Workers discharged for striking during the warning period have no NLRA rights.

Existing contract terms and conditions continue through warning period.


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Legal Requirements for Collective Bargaining

2) Duty to Bargain in Good Faith

Section 8(d), NLRA

“Mutual obligation of the employer and representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, ….

But such obligation does not compel either party to agree to a proposal or require the making of a concession.”


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Legal Requirements for Collective Bargaining

Standards for Good-Faith Bargaining

Totality of Conduct: bad-faith determination hinges on pattern of behavior, not individual incidents

Employer Provision of Information

Employer must provide information requested by the union, provided

It is relevant to the contract

It does not reveal trade secrets

It is not unduly burdensome to collect

Firm must provide financial information if it claims inability to pay


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Legal Requirements for Collective Bargaining

Standards for Good-Faith Bargaining

Surface Bargaining

Tactical delays or other actions that indicate insincere efforts to reach an agreement

Boulwarism: Take-it-or-Leave-it offers

General Electric’s Lemuel Boulware’s strategy of making a ‘reasonable’ offer and then refusing to budge.


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Legal Requirements for Collective Bargaining

Mandatory, Voluntary and Illegal issues (Borg-Warner, 1958)

Mandatory issues

must be discussed if raised by either party

can be pushed to impasse

Voluntary issues

must only be discussed if both parties agree

Cannot be pushed unilaterally to impasse

Illegal issues

Cannot be raised by either party

See Table 5-1, p. 209, Carrell and Heavrin


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Legal Requirements for Collective Bargaining

Mandatory issues

Issues included in the NLRA Section 8(d)

wages, hours, and other terms and conditions of employment

Borg-Warner: subjects that ‘vitally affect’ employees

Employee security

Job Performance

Union Security

Subcontracting or substitution of other labor for work in the bargaining unit


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Legal Requirements for Collective Bargaining

Ratification of contract by majority vote of rank-and-file

If ratified, contract is written:

Typical parts:

Wage/compensation/working conditions

Union security

Job security/individual rights

Contract administration


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Legal Requirements for Collective Bargaining

Impasse: If a legal impasse is reached

Firm can unilaterally implement its “last, best offer” including voluntary issues

Parties may submit to third party intervention (FMCS, others)

Parties may agree to continue to work under the old contract

Lockout

Strike


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Typical Bargaining Process

  • Figure 5-2, p. 207 of Carrell and Heavrin


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Setting Goals: Flanagan’s Model of Public Goods

  • Public good:

    • Nonrival: Consumption by one person does not limit amount available for others

    • Nonexclusive: no one can be excluded from consuming the good

  • Role of homogeneity vs heterogeneity of preferences

    • More heterogeneity means less satisfaction

    • Union stability may be threatened if heterogeneity is prevalent

  • Median voter preferences matter


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Setting Goals: Flanagan’s Model of Public Goods

Problems

Multiple issues—no unique best solution

Log rolling

Intensity of preferences

Unions do the best they can

Monitor progress of previous contract administration to find sticking points

Review other contracts in the industry

Survey of members (example of the Teamsters and UPS, p. 213-214 in Carrell and Heavrin)

Economic (compensation) and Noneconomic (working conditions, union security, contract administration)


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Features

Sticking points (reservation wages)

Union has minimum acceptable wage

Firm has maximum acceptable wage

Information is typically private

Union Resistance Curve

Determines how rapidly union moderates its demands

Firm Concession Curve

Determines how rapidly firm raises its offer

Contract Zone


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Features

Union reservation wage and resistance depends on union bargaining position

Unemployment Rate

Strike fund

Industry experience re wages, benefits

Possible permanent loss of jobs, union security if there is an impasse


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Features

Firm reservation wage and concession depends on firm profitability

Potential for lost market share and revenue if production is disrupted

Potential for use of substitute labor for union labor

Other plants

Replacement workers

Firm profitability and productivity growth

Inventories


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Wage

Concession

W*

Resistance

T*

Time


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

HIGH UNEMPLOYMENT RATE

Wage

C

C’

W*

R

R’

T*

Time

?


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

LOW UNEMPLOYMENT RATE

Wage

C’

C

W*

R’

R

T*

Time

?


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Role of strike date

Imposes costs on both firm and union, forces parties to bargain seriously

Steepens resistance and concession curves


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

ROLE OF STRIKE DATE

Wage

C’

C

?

W*

R’

R

T*

Time


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Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions

Role of uncertainty

May cause parties to underpredict rival’s resistance or overpredict likelihood of concessions

Strikes as Mistakes


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Bargaining Theory: Ashenfelter-Johnson Model

Features

Firm knows Union resistance Curve

Compute expected present value of profit at each length of strike

Force strike if it maximizes profit

Union leadership = rank-and-file

Strikes as rational outcomes


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Ashenfelter-Johnson model—firm forces a strike if wage reduction will lead to long-run higher profitability

Wage

Resistance

Strike length

PV(Profit)

Firm Profit

Strike length

S*


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