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U.S. Union Contracts

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  1. U.S. Union Contracts • Centerpiece of U.S. labor relations has long been union contracts that specify rights and responsibilities of employees, unions, and employers (including wages and other terms and conditions of employment) • Contracts grew out of need to replace managerial favoritism and discrimination with impartial rules based on the job—not on unfair manipulation of piece rates and arbitrary use of layoffs • Most contracts have duration of three years and are re-negotiated upon expiration • Some include re-opener in which parties can reopen contract during its life to negotiate wage and benefit adjustments only

  2. Box 9.1: Major Components of Traditional U.S. Union Contracts

  3. Employee Rights and Obligations • Four common areas of employee rights granted in union contracts: • Just cause discipline and discharge • Seniority rights • Compensation • Grievance procedures • In return, employees obligated to follow employer’s work rules, supervisors’ directions, and the contract (such as not striking over grievances)

  4. Seniority • Normally defined as length of service w/ Er • Benefit-status (e.g., vacations) • Competitive-status • A factor in selecting ees for layoffs in ~90% of major contracts • “Sufficient ability” / “relative ability” clauses apply • Some role in promotion decisions in ~75% of major contracts • Sole factor (“straight seniority”) (relatively uncommon) • Most senior Ee promoted wo/ regard to ability • “Sufficient ability” • Seniority determining factor when Ee qualified for job • “Relative ability” • Seniority is secondary factor to be considered when other factors equal

  5. Compensation • Basic Patterns • Most CBAs for 3 yr duration • “Just cause” for discharge required in ~85% • Provisions designed to lower health care costs increasingly common • In addition to increasing wage levels, over time Us have introduced innovations such as • COLAs (~50% of CBAs in late 70s, now <20%) • Deferred wage increases (~80% of CBAs) • Now standard benefits (pensions, health insurance, sick leave, SUBs, vacations, holidays [median is 11]) • Recent Developments • Concessions • Reduced (or eliminated) COLAs • Lump sum increases (~15% of CBAs) • Contingent compensation • Two-tier wage agreements (~30% of CBAs)

  6. “Demands for Labor Givebacks Grow More Aggressive” • U leaders increasingly in role of selling concessions to rank-and-file, while cos becoming more aggressive in demands • UAW pioneered whole package of Er-provided benefits – now being dismantled Source: Wall Street Journal, 10/27/05

  7. Job Rights and Obligations • In blue-collar settings, wage rates are tied to specific jobs, not individuals (i.e., holder of specific job is entitled to a certain wage rate by virtue of holding that job, irrespective of their individual characteristics) • Certain jobs are entitled to perform certain tasks • Explicit prohibitions against supervisors doing bargaining unit work

  8. Job and Income Security • Unions seek • Notification of introduction of new technology • Advance notification of plant closings (beyond WARN Act provisions) • Transfer rights, relocation allowances • Prohibitions against contracting out • Most clauses don’t ban, but provide for advance notice, consultation w/ U, a/o limits on number of barg unit ees laid off, economic conditions involved • Regulation of layoff methods • Retraining for those laid off • SUB plans • Severance pay • Classic conflict between Ees’ desire for security, Er’s desire for flexibility

  9. Management Rights and Obligations • Freedom of mngt to make decisions wo/ involvement of U • Unilateral authority when no bargaining representative in place • Restrained only by employment law, labor markets • Bilateral decision-making following selection of bargaining rep • Mngt rights clause in CBA may be general or specific

  10. Management Rights and Obligations • Two Views re: Management Rights • Reserved/residual rights • All rights not covered by specific clause in CBA are retained by mngt • Implied obligations • U recognition clause in CBA requires mngt to negotiate changes in terms and conditions even in absence of express provision covering issue involved • Implications of views in practice • If mngt introduces new machinery into workplace, must this be bargained w/ U?

  11. Shop Stewards • Shop stewards are employees selected by the rank and file or appointed by union leadership to be first-line advocates for workers to ensure that contract is not violated • Contracts frequently include clauses in which employers recognize right of stewards to investigate grievances, some contracts specify the number of stewards, grant them special seniority rights (“superseniority”), and indicate that the company will pay the steward for time conducting legitimate union business

  12. Union Security • Unions seek U security clause to protect against being undermined by Er, “free riders,” other unions • Closed shop • Requires Ee be U member before Er hires – illegal under T-H • Union shop • Requires barg unit Ee employed specific length of time (not less than 30 days) must become member of U as condition of continued employment • Legally, all that can be compelled is dues payment

  13. Union Security • Modified U shop • Any barg unit Ee hired after date specified by CBA must become U member • Agency shop • Requires any barg unit Ee who is not U member must pay service fee to U for representation activities • Maintenance of membership • Any barg unit Ee who becomes U member must remain member as condition of continued employment • Open shop • Checkoff • Er deducts dues, remits $ to U • Avoids workplace disruptions • Insulates Ees from U discipline due to nonpayment • Provides revenue stream to U

  14. Source: National Right-to-Work Legal Defense Foundation

  15. Union Security • Supreme Court ruled in Beck case (1988) that T-H does not permit U to collect agency fees beyond those necessary to finance CB whenever nonmember objects to use of fees for purposes not directly related to bargaining and contract administration

  16. Union Rights and Obligations • A central issue in contract administration for labor unions is duty of fair representation • In return for the privilege of being the exclusive representative, unions have an obligation to fairly and without discrimination represent all of the bargaining unit employees • This obligation applies to both contract negotiations and administration

  17. Right to Work Laws • Pro • Every citizen should have right to work whether or not s/he belongs to U • No individual should be compelled to join private organization, particularly if org uses individual’s dues to support causes individual opposes • Voluntary unionism insures U is responsive • RTW states benefit re: economic development

  18. Right to Work Laws • Con • RTW is misleading PR slogan; unions not denying anyone right to seek employment; no difference between U security and other terms and conditions • U has legal duty of fair representation – those not paying dues/fees are “free riders” • RTW states have lower wages, poorer working conditions • Research suggests passage of RTW law leads to reduced U membership (appears such laws don’t simply reflect lesser support for unions)