Collective Bargaining Agreement Defined
As you probably know, collective bargaining agreements (CBAs) are contracts. But what does that mean when we talk about employer breach of a CBA? The answer is deceptively simple. A collective bargaining agreement is a contract between a union (some of your employees) and their employer (you) that sets the terms for employee wages and working conditions.
CBAs can address almost anything you can think of at the workplace. They cover minimum work hours, overtime, grievance procedures, working conditions, and safety issues. CBAs can also cover things like the number of breaks or meals employees will receive.
A union will negotiate with the employer on behalf of the employees to reach those terms . Typically, once a CBA has been agreed upon, it will remain in effect for three to five years. CBAs are important because they give employees input into their working conditions. They address working conditions and pay in ways that are most beneficial to the employees. Sometimes a CBA is more beneficial to the employer, but most times it is the opposite.
Failing to abide by the terms of a CBA can create a breach of contract claim in situations where a collective bargaining agreement takes precedence over a specific term in an employment contract and the CBA is breached, or where a CBA provides for something as part of the terms of employment and a violation occurs.
Key Components of a Collective Bargaining Agreement
The core components of a typical collective bargaining agreement include: wages, benefits; hours of work, working conditions; grievance and arbitration procedures; union security checks off provisions; seniority provisions affect layoff and recall; eligibility for pension and health insurance; no strikes clause; maintenance of standards clause; dues check off provisions; work rules; probationary periods must be stated; union security clauses mandatory unless union security is prohibited by state law; organizational security clauses states that new employees are "required" to join the union when an organizing election is won by the union.
Common Breaches by Employer in a Collective Bargaining Agreement
Employers can breach CBAs through a variety of actions, including a failure to negotiate in good faith, unilateral changes to terms set forth in the CBA, and/or failure to honor grievance procedures. A breach by an employer can occur through the employer’s unilateral change to a term in the CBA. For instance, if the contract provides for contributions by the employer through a particular period and the employer makes the payments at different periods than called for by the contract, this can be deemed a breach of the CBA by the employer.
Consequences of Breaching a Collective Bargaining Agreement
Employers who breach a Collective Bargaining Agreement risk lawsuits by adversely affected employees and unions representing those employees, whether the breach is inadvertent or intentional. Although an employer may not face a lawsuit every time it breaches a CBA, they may nevertheless be exposed to expensive and time-consuming proceedings arising from mandated grievance and arbitration procedures or because of intervention in labor disputes by the National Labor Relations Board and other agencies. Therefore, as discussed in Section 8, the cost of litigation must be taken into account when deciding to break a CBA.
In a nutshell, a breach of a CBA may result in: (1) a suit for damages; (2) an injunction preventing the further breach; (3) an order to compel compliance with the CBA; (4) a fine; and/or (5) an order to make any adversely affected employee whole.
The court referred to the remedies available under Section 301 of the Labor Management Relations Act as "damage remedies," which typically may be only a few thousand dollars in an individual case. Businesses must also consider the possibility of several thousand dollars in attorneys’ fees in defending the lawsuit. Although the fees charged by their attorneys may be less than that a plaintiff’s attorney, it becomes increasingly difficult for employers to afford to pay their attorneys and defend claims brought by their employees when the claims are worth only a few thousand dollars.
One significant factor making the cost of litigation such an important component of the analysis is that suits involving labor agreements are frequently filed as class action lawsuits. Class action lawsuits carry with them the risk of multi-million dollar judgments that would bankrupt all but the largest businesses. The cost of class action lawsuits therefore can quickly exceed the cost of litigation itself to include liability for punitive damages and attorneys’ fees.
The National Labor Relations Board and labor unions themselves play active roles in the enforcement of compulsory arbitration periods and arbitration decisions. It is within the discretion of the Court when it will elect to enforce these aspects of CBA. According to the Third Circuit Court of Appeals, the most important consideration is the protection of the integrity of the collective bargaining process that is represented by the CBA. The courts are reluctant to intervene in internal disputes of NRA supervision of these plans, believing that the employees’ capacity as a class is adequate information without outside scrutiny.
How to Remedy the Breach
If an employer breaches the CBA, an employee or union can either file a grievance or a claim with the NLRB. Since the employer ‘breached’ the contract, the employee or union would likely want to file the policy suit and argue that the breach ‘taints’ the arbitration process. For example, an employee could argue that if the employer had not breached the contract, they would have been reinstated without having to go to an arbitration hearing to get their job back. Thus, the failure to reinstate the employee was a violation of the agreement. There is support to indicate that a breach of the CBA would not be strictly enforced, but rather as a general issue that needs to be addressed as they arise.
There is no mandatory grievance procedure, but it is often a requirement before going to the NLRB. The employee or union can also file a charge with the NLRB that the employer unilaterally implemented the policy that should have gone to the NLRB (or arbitration proceeding) or a PLBA. If the NLRB finds the allegations true, it would then need to order a remedy, usually reinstatement, or a modified remedy , if the violation involved less than the full time frame for the violation.
Post-termination remedies are hard to obtain since the employer may not be an active entity at the time of the decision. However, the employee or union could argue that the remedy could be the order for the company to reinstate the employee and to keep the CBA in place. A court would need to determine whether the issue of the breach of the CBA is a substantial aspect of the dispute, or whether it is a mere incidental matter of the dispute. If the dispute is primarily regarding the breach of the CBA, the PLBA would govern the action. If there is a unique state claim, the court may allow the issue to proceed under state law, but no case law indicates this is a common issue.
If an employee or union violates an employer’s breach of the CBA, the employer may file a lawsuit with the court system to enforce its rights under the CBA against the employee and the union. The court could enforce the CBA by mandating restitution of back pay or other damages against the employee and the union. Given the cost and investigative time, it is often advised to follow the grievance procedure, rather than resort to filing a lawsuit.
Preventing Breaches by Employer
To avoid breaching their collective bargaining agreements, employers should regularly train their supervisors and managers about their obligations under the CBA, what impermissible behavior looks like and the possible repercussions of breaching the agreement or failing to abide by its terms. Workers are always watching and listening. They know if their employer is abiding by the CBA and they know if it is not. Even if an employer does not intend to hurt workers, a breach of contract will directly impact upon them and the relationship between the company and its employees. Keeping the lines of communication open, especially when it comes to any potential changes to the contract, can go a long way toward minimizing the likelihood of a breach occurring. If an employer needs or wants to change something with regard to the CBA, he should sit down with the union and begin a discussion regarding why a modification is necessary and why it can be beneficial to the union and its members. Hopefully, that discussion will result in a contract modification and a decision not to breach the CBA on the part of the company.
Examples of Employer Breaches with Outcomes
Employers have been found to breach collective bargaining agreements in numerous ways, with outcomes ranging from the payment of monetary damages to the imposition of injunctive relief. A few examples are provided below.
In Outten v. State of N.Y., 108 A.D.3d 996 (N.Y. App. Div. 2013), the New York Appellate Division held that an employer was liable for failing to adhere to its collective bargaining agreement by not using "objective criteria" established for a particular position when selecting candidates for that position. The court found there is no presumption that an employer will discriminate in applying the terms of a collective bargaining agreement, absent proof that the employer had previously consistently and systematically favored a particular group.
The U.S. Court of Appeals for the Third Circuit upheld a decision finding a breach of a negotiated collective bargaining agreement by the Philadelphia Housing Authority ("PHA"). Local 668, American Federation of State, County, and Municipal Employees, AFL-CIO ("AFSCME") v. Philadelphia Housing Authority, 484 F. App’x 739 (3d Cir. 2012); Local 668, American Federation of State, County, and Municipal Employees, AFL-CIO, v. Philadelphia Housing Authority, 2010 U.S. Dist. LEXIS 18061 (E.D. Pa. 2010). In Local 668, the district court granted summary judgment in favor of AFSCME, finding the PHA had breached the collective bargaining agreement requiring it to "act in good faith, reasonably, and without discrimination in determining promotions and transfers." The PHA announced a new internal procedure for promotion from a bargaining unit position to a position outside the bargaining unit and required employees to complete such promotions through the new internal procedure. The new promotional policy left no room for promoted employees to retain the protections of the collective bargaining agreement. Id. at *13. The appellate court affirmed the decision in favor of AFSCME, holding the district court had properly granted summary judgment on the ground that the PHA’s new policy violated the collective bargaining agreement. Local 668, 2012 U.S. App. LEXIS 20842 at *3.
In Newport News Shipbuilding & Drydock Co. v. Shipyard Workers’ Union Local 888, Local Lodge 888 of International Association of Machinists and Aerospace Workers, 467 Fed. Appx. 241 (4th Cir. 2012), the U.S . Court of Appeals for the Fourth Circuit upheld a finding that the employer violated the collective bargaining agreement by unilaterally taking a benefit away from employees. The court found the employer’s unilateral action violated the implicit "presumption . . . that collective bargaining requires a level of good faith bargaining and substantive discussions." Id. at 246-247. The court reasoned that although the employer did not appear to have taken any action that was intended to nullify or revoke a former benefit, it did take away a benefit already previously granted to all employees. In Local 289, International Union of Operating Engineers v. Johns-Manville Corp., 841 F.2d 415 (6th Cir. 1988), a federal appellate court found that an employer breached a collective bargaining agreement by adopting a mandatory insurance plan that retroactively deprived employees of their right to make a choice regarding the type of insurance under the collective bargaining agreement. Under the collective bargaining agreement, employees could choose whether to continue an existing, voluntary insurance plan by continuing to pay premiums. However, the employer did not provide employees the option of keeping their existing insurance plan when it adopted a new insurance plan that was only available to union employees who signed up at the time the plan became effective. At the time the new plan was implemented, management employees and union employees were given the option of either continuing their insurance or signing up for the new insurance plan. The union challenged the new plan in federal district court, which found the employer had not complied with the collective bargaining agreement. The district court ordered injunctive relief requiring the employer to pay benefits under its previous health plan to those employees adversely affected by the employer’s actions. Id. at 416. On appeal, the Sixth Circuit upheld the lower court’s grant of injunctive relief based on a finding that the employer violated the collective bargaining agreement. Id. at 417.
Through these case studies, employers may gain a further understanding of how the courts have applied these principles regarding the employer’s obligations under a collective bargaining agreement, "the collective bargaining process, and the public policy supporting full disclosure and good faith dealing in negotiations," to employer conduct.