Legal Requirements for Collective Bargaining

1)

Notification of Intent to Bargain:

Warning period: Party wishing to terminate or modify an existing agreement must notify the other party at least 60 days prior to the date (90 days in the case of a health care institution) Parties must notify FMCS within 30 days of the initial notification of the intent to terminate or modify. Union cannot strike during the 60-day period. Workers discharged for striking during the warning period have no NLRA rights. Existing contract terms and conditions continue through warning period.

Legal Requirements for Collective Bargaining

2) Duty to Bargain in Good Faith
Section 8(d), NLRA Mutual obligation of the employer and representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, . But such obligation does not compel either party to agree to a proposal or require the making of a concession.

Legal Requirements for Collective Bargaining

Standards for Good-Faith Bargaining
Totality of Conduct: bad-faith determination hinges on pattern of behavior, not individual incidents Employer Provision of Information
Employer must provide information requested by the union, provided
It is relevant to the contract It does not reveal trade secrets It is not unduly burdensome to collect

Firm must provide financial information if it claims inability to pay

Legal Requirements for Collective Bargaining

Standards for Good-Faith Bargaining
Surface Bargaining
Tactical delays or other actions that indicate insincere efforts to reach an agreement

Boulwarism: Take-it-or-Leave-it offers

General Electrics Lemuel Boulwares strategy of making a reasonable offer and then refusing to budge.

Legal Requirements for Collective Bargaining

Mandatory, Voluntary and Illegal issues (BorgWarner, 1958)
Mandatory issues
must be discussed if raised by either party can be pushed to impasse

Voluntary issues
must only be discussed if both parties agree Cannot be pushed unilaterally to impasse

Illegal issues
Cannot be raised by either party

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

Legal Requirements for Collective Bargaining

Mandatory issues
Issues included in the NLRA Section 8(d)
wages, hours, and other terms and conditions of employment

Borg-Warner: subjects that vitally affect employees

Employee security Job Performance Union Security Subcontracting or substitution of other labor for work in the bargaining unit

Legal Requirements for Collective Bargaining

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

If ratified, contract is written:

Typical parts:
Wage/compensation/working conditions Union security Job security/individual rights Contract administration

Legal Requirements for Collective Bargaining

Impasse: If a legal impasse is reached
Firm can unilaterally implement its last, best offer including voluntary issues Parties may submit to third party intervention (FMCS, others) Parties may agree to continue to work under the old contract Lockout Strike

Typical Bargaining Process

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

Setting Goals: Flanagans Model of Public Goods

Public good:

Nonrival: Consumption by one person does not limit amount available for others Nonexclusive: no one can be excluded from consuming the good
More heterogeneity means less satisfaction Union stability may be threatened if heterogeneity is prevalent

Role of homogeneity vs heterogeneity of preferences

Median voter preferences matter

Setting Goals: Flanagans Model of Public Goods

Problems
Multiple issuesno unique best solution Log rolling Intensity of preferences

Unions do the best they can

Monitor progress of previous contract administration to find sticking points Review other contracts in the industry Survey of members (example of the Teamsters and UPS, p. 213-214 in Carrell and Heavrin) Economic (compensation) and Noneconomic (working conditions, union security, contract administration)

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions Features
Sticking points (reservation wages)
Union has minimum acceptable wage Firm has maximum acceptable wage Information is typically private

Union Resistance Curve

Determines how rapidly union moderates its demands

Firm Concession Curve

Determines how rapidly firm raises its offer

Contract Zone

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions Features
Union reservation wage and resistance depends on union bargaining position
Unemployment Rate Strike fund Industry experience re wages, benefits Possible permanent loss of jobs, union security if there is an impasse

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions Features
Firm reservation wage and concession depends on firm profitability
Potential for lost market share and revenue if production is disrupted Potential for use of substitute labor for union labor
Other plants Replacement workers

Firm profitability and productivity growth Inventories

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Wage Concession

W*
Resistance

T*

Time

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Wage

HIGH UNEMPLOYMENT RATE

C C

W*
R

R
T* ? Time

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Wage

LOW UNEMPLOYMENT RATE

C C

W*
R R

T* ?

Time

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Role of strike date
Imposes costs on both firm and union, forces parties to bargain seriously Steepens resistance and concession curves

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Wage

ROLE OF STRIKE DATE

C C

? W*

R R

T*

Time

Bargaining Theory: Hicks Theory of Union Resistance and Employer Concessions

Role of uncertainty
May cause parties to underpredict rivals resistance or overpredict likelihood of concessions

Strikes as Mistakes

Bargaining Theory: Ashenfelter-Johnson Model Features

Firm knows Union resistance Curve Compute expected present value of profit at each length of strike Force strike if it maximizes profit Union leadership = rank-and-file

Strikes as rational outcomes

Wage

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

Resistance

PV(Profit)

Strike length

Firm Profit

S*

Strike length