legal requirements for collective bargaining 1) notification of intent to bargain: warning period:...
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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.
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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.”
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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.
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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
Legal Requirements for Collective Legal Requirements for Collective BargainingBargaining
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
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
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
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
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
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
Concession
Resistance
W*
Wage
TimeT*
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
HIGH UNEMPLOYMENT RATEHIGH UNEMPLOYMENT RATE
C
R
W*
Wage
TimeT*
R’
C’
?
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
LOW UNEMPLOYMENT RATELOW UNEMPLOYMENT RATE
C
R
W*
Wage
TimeT*
R’
C’
?
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
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
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
ROLE OF STRIKE DATEROLE OF STRIKE DATE
C
R
W*
Wage
TimeT*
R’
C’
?
Bargaining Theory: Hicks’ Theory of Union Bargaining Theory: Hicks’ Theory of Union Resistance and Employer ConcessionsResistance and Employer Concessions
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