United States: It’s Getting Harder To Say Goodbye

Howard Sokol is a Partner and Katherine Healy Marques an Associate in our New York office.

NLRB Limits Construction Industry Employers' Contract Expiration Withdrawal Rights from Multi-Employer Associations

The National Labor Relations Act (NLRA or Act) allows employers, including those in the construction industry, to join together to bargain with a union. This is called "multi-employer bargaining." But there are specific rules and requirements that an employer must follow in order to remove itself from multi-employer bargaining and avoid being bound by the next collective bargaining agreement negotiated by the multi-employer group. Failure to follow these rules means that an employer will continue to be bound by the contract resulting from multi-employer bargaining — whether it wants to or not.

In a decision issued late last year, the National Labor Relations Board (Board or NLRB) made it even more difficult for a construction industry employer to leave a multi-employer bargaining group. Previously, and for almost 20 years, a union seeking to keep a construction industry employer in a multi-employer group and bind it to a new contract had to show that the employer affirmatively demonstrated to the union its intention to be bound by the new contract. Now it appears that the NLRB will bind a construction industry employer to the multi-employer agreement if it failed to follow the multi-employer association's rules for withdrawing from multi-employer bargaining — even if the employer did not give the union any indication it intended to be bound by a new contract. Carr Finishing Specialties, Inc., 358 NLRB No. 165 (2012).

As a result, in 2013 and going forward, construction employers considering whether and how to join or withdraw from multi-employer bargaining associations should pay careful attention to Carr Finishing as they make their strategic business and employment-related decisions.

Employer Repudiation of Union Relationships in Construction Industry

Section 8(f) of the NLRA gives construction industry employers a unique exception to the standard election procedures and requirements under section 9(a) of the Act. Outside the construction industry, unions receive recognition under section 9(a) only by either: (1) establishing majority status representation of employees through a secret ballot election conducted by the Board, or (2) through voluntary recognition by the employer. The section 8(f) exception, however, recognizes the special predicament of construction employers, which typically do not have permanent workforces, need to be able to predict their labor costs when submitting bids on contracts, and rely upon the local unions as their source of labor. Accordingly, construction employers are permitted to recognize and enter into collective bargaining agreements with construction industry unions even before they hire any employees, and without any expression of union support by the employees.

While neither party to such an 8(f) "pre-hire" agreement may repudiate the agreement during its term, once a pre-hire agreement expires, and unlike in the section 9(a) context,1 either side is then free to repudiate the relationshipand refuse to continue to honor the expired agreement. The employer may even refuse to recognize the union in the absence of the union's demonstrated majority status.

In addition to being able to enter Section 8(f) "prehire" agreements, construction industry employers can also band together with other employers to engage in multi-employer bargaining. The intersection of the right to repudiate a "pre-hire" contract and the rules for exiting a multi-employer bargaining group can create problems for employers, as the Carr Finishing decision demonstrates.

Prior Precedent Favored Allowing Single Employer Withdrawal from Multi-Employer Negotiations

The Board's rules for withdrawal from multi-employer associations has evolved. It established the rules on which an employer outside the construction industry can withdraw from participation in a multi-employer bargaining association in the Section 9(a) context in Retail Associates, Inc., 120 NLRB 388 (1958). Under Retail Associates, an employer outside the construction industry that was previously part of a multi-employer bargaining association must affirmatively demonstrate its intention to withdraw from the multi-employer association before multi-employer bargaining starts; an employer that remains silent before and during multiemployer bargaining will be bound to the next agreement negotiated by the multiemployer association.

In its 1994 decision in James Luterbach Construction Co., 315 NLRB 976 (1994), the Board addressed withdrawal from a multi-employer association by a construction industry employer subject to a pre-hire agreement. It ruled that because a single 8(f) employer may automatically repudiate the agreement and its relationship with the union, once its pre-hire agreement with a union expires, an employer participating in a multiemployer association must also demonstrate some "affirmative action" illustrating its intention to be bound to the association's bargaining efforts, in order to be found to be bound to any successor agreement.  

Thus, in Luterbach, the Board formalized this distinction with its two-part test. The first prong (like the test for 9(a) employers) asks whether the employer was part of the multiemployer association prior to the dispute at issue. If that answer is yes, prong two then asks whether "the employer has, by a distinct affirmative action, recommitted to the union that it will be bound" by the upcoming or current multiemployer negotiations. Luterbach strongly implies that only where the second prong is also answered in the affirmative will a single employer in the construction industry then be bound to a successor multiemployer agreement.

Luterbach has remained the law, but it has been enforced rarely since 1994. See Iron Workers Tri-State Welfare Plan v. Carter Construction, Inc., 530 F. Supp. 2d. 1021, 1031 (N.D. Ill. Jan. 18, 2008) (finding that a single employer undertook no distinct affirmative act sufficient to bind it to subsequent multiemployer negotiations). For example, and on the federal appellate level, the First, Third and Tenth U.S. Circuit Courts of Appeals have cited the Luterbach two-prong approach as background in section 9(a) contexts, but each then applied the Retail Associates method.2 See, e.g., Haas Electric, Inc. v. NLRB, 299 F.3d 23, 27 (1st Cir. 2002) (covering Connecticut, Massachusetts, Maine, New Hampshire and Rhode Island); Sheet Metal Workers' Int'l Ass'n Local 19 v. Herre Bros., Inc., 201 F.3d 231, 242 (3d Cir. 1999) (covering Delaware, New Jersey and Pennsylvania); NLRB v. Triple C Maintenance, Inc., 219 F.3d 1147, 1156 (10th Cir. 2000) (covering Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming).

Limits on Employer Withdrawal and Repudiation under Association Agreements

In Carr Finishing, the Board added a roadblock to individual employers seeking to exit multiemployer associations. In this recent decision, the Board determined that the employer at issue violated the Act by unilaterally ceasing to apply the terms of the multi-employer collective bargaining agreement to unit employees without following the multi-employer association's rules to withdraw. In the case, the Upstate Iron Workers Employers' Association (UIWEA) — like many multi-employer bargaining associations — accepted those employers that completed an agency agreement stating that the UIWEA would be the sole and exclusive agent of the employers in collective bargaining with local unions.

The Board explained that the employer would have only been able to lawfully withdraw from the UIWEA by complying with the agency agreement's express terms, which the employer failed to do when it neglected to resign its membership in the UIWEA before the final 90 days of the prior collective bargaining agreement.

What This Means for Construction Industry Employers

Carr Finishing strongly suggests that once a single employer has designated the multi-employer association as its bargaining agent, the NLRB will not require any additional affirmative action to bind the employer to subsequent multi-employer negotiations or agreements. It is, then, virtually automatic — making it significantly harder for the employer to say goodbye to the multi-employer association and avoid being bound to the association's next negotiated agreement with the union.

As a result of Carr Finishing, employers in the construction industry who enter multi-employer associations should carefully scrutinize the obligations conferred on them under their association's documents. Carr Finishing raises a concern that by joining an association for the convenience of shared resources and greater negotiating leverage than each individual employer would have alone, an employer may be sacrificing significant advantages it would otherwise hold under section 8(f), namely, the ability to repudiate freely its recognition of a union at the end of each collective bargaining agreement term.

Footnotes

1 Employers outside the construction industry can end a relationship with a union only on a showing that the union no longer represents a majority of the bargaining unit employees no longer supports the union or the union no longer wishes to represent the employees.

2 The employers at issue in both Herre Bros. and Triple C Maintenance, respectively, were each found to have voluntarily recognized the union as a section 9(a) bargaining representative by including recognition language in their collective bargaining agreements with the unions. The employer in Haas Electric never challenged the application of the Retail Associates analysis, so the First Circuit did not apply the Board's reasoning and test of Luterbach in its review.

www.hklaw.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions