Legal Requirements for Collective Bargaining 1) Notification of Intent to Bargain: Warning period: Party wishing to terminate or modify an existing agreement

Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining

1)1) Notification of Intent to Bargain:Notification of Intent to Bargain:Warning period: Party wishing to terminate or modify an Warning period: Party wishing to terminate or modify an

existing agreement must notify the other party at least existing agreement must notify the other party at least 60 days prior to the date (90 days in the case of a health 60 days prior to the date (90 days in the case of a health care institution)care institution)

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

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

Existing contract terms and conditions continue through Existing contract terms and conditions continue through warning period.warning period.


2) Duty to Bargain in Good Faith2) Duty to Bargain in Good FaithSection 8(d), NLRASection 8(d), NLRA

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

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


Standards for Good-Faith BargainingStandards for Good-Faith BargainingTotality of Conduct: bad-faith determination hinges Totality of Conduct: bad-faith determination hinges

on pattern of behavior, not individual incidentson pattern of behavior, not individual incidents

Employer Provision of InformationEmployer Provision of InformationEmployer must provide information requested by the Employer must provide information requested by the

union, providedunion, providedIt is relevant to the contractIt is relevant to the contract

It does not reveal trade secretsIt does not reveal trade secrets

It is not unduly burdensome to collectIt is not unduly burdensome to collect

Firm must provide financial information if it claims Firm must provide financial information if it claims inability to payinability to pay


Standards for Good-Faith BargainingStandards for Good-Faith BargainingSurface BargainingSurface Bargaining

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

Boulwarism: Take-it-or-Leave-it offersBoulwarism: Take-it-or-Leave-it offersGeneral Electric’sGeneral Electric’s Lemuel Boulware’s strategy of Lemuel Boulware’s strategy of

making a ‘reasonable’ offer and then refusing to making a ‘reasonable’ offer and then refusing to budge.budge.


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

Mandatory issues Mandatory issues must be discussed if raised by either partymust be discussed if raised by either partycan be pushed to impassecan be pushed to impasse

Voluntary issuesVoluntary issuesmust only be discussed if both parties agreemust only be discussed if both parties agreeCannot be pushed unilaterally to impasseCannot be pushed unilaterally to impasse

Illegal issuesIllegal issuesCannot be raised by either partyCannot be raised by either party

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


Mandatory issuesMandatory issuesIssues included in the NLRA Section 8(d)Issues included in the NLRA Section 8(d)

wages, hours, and other terms and conditions of wages, hours, and other terms and conditions of employmentemployment

Borg-Warner:Borg-Warner: subjects that ‘vitally affect’ subjects that ‘vitally affect’ employeesemployees

Employee securityEmployee security

Job PerformanceJob Performance

Union SecurityUnion Security

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


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

If ratified, contract is written:If ratified, contract is written:Typical parts:Typical parts:

Wage/compensation/working conditionsWage/compensation/working conditions

Union securityUnion security

Job security/individual rightsJob security/individual rights

Contract administrationContract administration


Impasse: If a legal impasse is reachedImpasse: If a legal impasse is reachedFirm can unilaterally implement its “last, best offer” Firm can unilaterally implement its “last, best offer”

including voluntary issuesincluding voluntary issues

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

Parties may agree to continue to work under the old Parties may agree to continue to work under the old contractcontract

LockoutLockout

StrikeStrike

Typical Bargaining ProcessTypical Bargaining Process

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

Setting Goals: Flanagan’s Model of Setting Goals: Flanagan’s Model of Public GoodsPublic Goods

Public good: Public good: Nonrival: Consumption by one person does not limit Nonrival: Consumption by one person does not limit

amount available for othersamount available for others Nonexclusive: no one can be excluded from consuming Nonexclusive: no one can be excluded from consuming

the goodthe good Role of homogeneity vs heterogeneity of preferencesRole of homogeneity vs heterogeneity of preferences

More heterogeneity means less satisfactionMore heterogeneity means less satisfaction Union stability may be threatened if heterogeneity is Union stability may be threatened if heterogeneity is

prevalentprevalent Median voter preferences matterMedian voter preferences matter

Setting Goals: Flanagan’s Model of Setting Goals: Flanagan’s Model of Public GoodsPublic Goods

ProblemsProblemsMultiple issues—no unique best solutionMultiple issues—no unique best solutionLog rollingLog rollingIntensity of preferences Intensity of preferences

Unions do the best they canUnions do the best they canMonitor progress of previous contract administration to find Monitor progress of previous contract administration to find

sticking pointssticking pointsReview other contracts in the industryReview other contracts in the industrySurvey of members (example of the Teamsters and UPS, p. Survey of members (example of the Teamsters and UPS, p.

213-214 in Carrell and Heavrin)213-214 in Carrell and Heavrin)Economic (compensation) and Noneconomic (working Economic (compensation) and Noneconomic (working

conditions, union security, contract administration)conditions, union security, contract administration)

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

FeaturesFeaturesSticking points (reservation wages)Sticking points (reservation wages)

Union has minimum acceptable wageUnion has minimum acceptable wage

Firm has maximum acceptable wageFirm has maximum acceptable wage

Information is typically privateInformation is typically private

Union Resistance CurveUnion Resistance CurveDetermines how rapidly union moderates its demandsDetermines how rapidly union moderates its demands

Firm Concession CurveFirm Concession CurveDetermines how rapidly firm raises its offerDetermines how rapidly firm raises its offer

Contract ZoneContract Zone


FeaturesFeaturesUnion reservation wage and resistance depends on Union reservation wage and resistance depends on

union bargaining positionunion bargaining positionUnemployment RateUnemployment Rate

Strike fundStrike fund

Industry experience re wages, benefitsIndustry experience re wages, benefits

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


FeaturesFeaturesFirm reservation wage and concession depends on Firm reservation wage and concession depends on

firm profitabilityfirm profitabilityPotential for lost market share and revenue if production Potential for lost market share and revenue if production

is disruptedis disrupted

Potential for use of substitute labor for union laborPotential for use of substitute labor for union laborOther plantsOther plants

Replacement workersReplacement workers

Firm profitability and productivity growthFirm profitability and productivity growth

InventoriesInventories


Concession

Resistance

W*

Wage

TimeT*


HIGH UNEMPLOYMENT RATEHIGH UNEMPLOYMENT RATE

C

R

W*

Wage

TimeT*

R’

C’

?


LOW UNEMPLOYMENT RATELOW UNEMPLOYMENT RATE

C

R

W*

Wage

TimeT*

R’

C’

?


Role of strike dateRole of strike dateImposes costs on both firm and union, forces parties to Imposes costs on both firm and union, forces parties to

bargain seriouslybargain seriously

Steepens resistance and concession curvesSteepens resistance and concession curves


ROLE OF STRIKE DATEROLE OF STRIKE DATE

C

R

W*

Wage

TimeT*

R’

C’

?


Role of uncertaintyRole of uncertaintyMay cause parties to underpredict rival’s resistance or May cause parties to underpredict rival’s resistance or

overpredict likelihood of concessionsoverpredict likelihood of concessions

Strikes as MistakesStrikes as Mistakes

Bargaining Theory: Ashenfelter-Johnson Bargaining Theory: Ashenfelter-Johnson ModelModel

FeaturesFeaturesFirm knows Union resistance CurveFirm knows Union resistance Curve

Compute expected present value of profit at each Compute expected present value of profit at each length of strikelength of strike

Force strike if it maximizes profitForce strike if it maximizes profit

Union leadership = rank-and-fileUnion leadership = rank-and-file

Strikes as rational outcomesStrikes as rational outcomes

Resistance

Strike length

Firm Profit

S*

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

PV(Profit)

Wage

Strike length

Documents

Legal Requirements for Collective Bargaining 1) Notification of Intent to Bargain: Warning period: Party wishing to terminate or modify an existing agreement