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
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.