COLLECTIVE BARGAINING INTERACTIONS
By
Charles B. Craver
Collective bargaining interactions between labor unions and corporate employers
constitute a subset of general negotiations, but the underlying legal and relationship aspects make
them unique. Unlike typical business negotiations and law suit negotiations that are not
regulated by statutory provisions, collective bargaining discussions are mandated and governed
by external laws. Private sector bargaining encounters are regulated by the National Labor
Relations Act (NLRA) for most workers and by the Railway Labor Act (RLA) for railroad and
airline personnel. Federal workers are covered by the Civil Service Reform Act, while state and
local government personnel are under state public sector bargaining laws.
Under the relevant statutes, employees have the right to organize and to select exclusive
bargaining agents to negotiate collective agreements defining their wages, hours, and working
conditions. They may engage in concerted activity for mutual aid and protection. For private
sector workers, this gives them the protected right to strike. Although federal workers and most
state and local employees are prohibited from striking, several states do permit non-essential
personnel to engage in work stoppages. Individuals who engage in a lawful economic strike may
not be discharged or otherwise disciplined for such protected activity, but under the Mackay
Radio decision of the Supreme Court they may be permanently replaced. After they have been
replaced, they retain preferential recall rights and must be rehired as positions become available
before outside persons are hired.
Labor unions selected by a majority of workers in an appropriate bargaining unit, which
may consist of homogeneous skilled workers or heterogeneous industrial workers, become the
exclusive bargaining agent for all of the individuals within that unit. They have the right to
demand bargaining over the wages, hours, and working conditions of the affected employees. On
the other hand, the NLRA specifically indicates that the duty to bargain does not require either
party to agree to specific proposals or to make concessions. They are merely obliged to meet at
regular times and to discuss the relevant issues in good faith.
One aspect of labor-management negotiations that is different from many other types of
bargaining interactions involves the on-going relationship between the parties. After collective
discussions are finished, the parties must continue to deal with each other. Union and
management negotiators must continue to meet to resolve disagreements that may arise with
respect to the application of bargaining agreement provisions, and employees and managers must
work together to produce profitable goods or services if the firm is to be successful. If union
negotiators drive a hard bargain that unduly inflates labor costs, workers will be displaced by
new technology or have their jobs transferred to lower cost areas of the U.S. or to developing
countries like Mexico, China, or India. If the company treats its workers badly, morale will
suffer, and good workers may seek employment elsewhere. Employees may also be less
committed to firm success, causing a loss of productivity or a decrease in work quality.
A factor which makes collective bargaining interactions relatively unique concerns the
many issues that have to be addressed. Many forms of compensation have to be discussed,
including hourly wages, piecework rates, fringe benefits such as pensions and health care, and
similar issues. What hours will the employees have to work, when will breaks and meal periods
be scheduled? Almost any working condition of interest to employees may also have to be
addressed. The expansive number of issues requires drawn-out negotiations that may go on for
weeks or months, as the parties try to resolve the different topics. On the other hand, the
multitude of bargaining subjects allows the parties to trade issues in ways that enable them to
expand the overall pie to be divided and maximize the joint return involved. Corporations should
concede issues union leaders value more for topics management officials prefer. This allows the
negotiating parties to seek win-win results that satisfy the underlying interests of both sides.
The multi-factor aspects of collective bargaining interactions makes the need for
thorough pre-negotiation preparation especially important. Both labor and management
negotiators should sit down with the people on their respective sides before they ever meet with
their opponents to decide which items need to be addressed and to determine their priorities.
Which terms are essential; which are important; and which are desirable? They should decide
which lower value issues they are prepared to trade for preferred terms. Which topics should they
plan to raise first and which later? Most negotiators prefer to commence their interactions with
the less significant subjects hoping to reach tentative agreements on these topics before they
move on to more important issues. This allows them to focus initially on areas subject to joint
gains, while they begin to create a psychological commitment to final accords. As they get to the
more controverted topics, those terms don’t seem as difficult as they would have had the parties
begun their talks with these subjects. In addition, neither side wants to see their prior tentative
agreements lost through a work stoppage and they both become more accommodating with
respect to the controverted terms.
There will always be distributive items that both sides value. These issues generally
concern monetary terms. Even in this area, however, if negotiators are willing to think outside
the box and seek innovative solutions, they may be able to expand the pie and simultaneously
improve their respective positions. For example, if profits have been declining, a company may
offer workers a bonus instead of a pay increase. The employees get the benefit of the cash
payments, but the base pay rates remain unchanged. Parties dealing with rising health costs may
agree to larger deductibles and co-payments instead of higher employee premiums. Employee
health care premiums are a difficult subject for union officials, since all workers see an
immediate reduction in their take-home pay. On the other hand, increased deductibles and copayments are more palatable, since workers are only affected by these considerations when they
become sick. They are so relieved to have health coverage that they have less difficulty accepting
the greater deductibles and co-payments.
One factor that makes collective bargaining encounters different concerns the political
nature of union officials. They are elected leaders who generally hope to be reelected.
Management officials occasionally forget this critical factor and embarrass their union
counterparts publicly. Political persons who are embarrassed in front of constituents will almost
always try to punish those who put them in this position. It thus behooves management
negotiators to work to avoid such circumstances. If they have bad news for labor representatives,
they should share it with them privately. They may take them outside the bargaining room or call
them on the telephone. The union leaders understand managerial constraints, and appreciate
being given this information away from the eyes of unit members. They may then put on a show
for their constituents at the bargaining table, but will ultimately yield to firm demands they
believe to be necessary. Corporate agents should let them play this role during the public
sessions, recognizing that it will make it easier for them to give in later.
Another critical factor concerns the impact of anchoring. When one side begins with a
generous initial offer, the other side is unlikely to appreciate this largess and respond in kind. It
instead begins to think it will do better than expected, and it begins with a less generous opening
offer. When I was in graduate school studying collective bargaining, I asked a friend who had
been a local union president what would happen if company negotiators began with a beneficial
first offer. He reacted with displeasure and suggested that such behavior would probably
generate a work stoppage. Once the rank-and-file employees learned of the munificent
management offer, they would raise their expectations and anticipate far better final terms. This
factor may have generated the cancellation of this year’s National Hockey League season. The
team owners were clearly concerned about rising labor costs, and they demanded a specific
division of revenues between the players and themselves. They apparently hoped to give the
players no more than 54 percent and retain 46 percent for themselves. Instead of initially offering
the players union 48 or 50 percent and allowing that side to talk them up to 53 or 54 percent,
they apparently began with an offer in the 53 percent area. The players and their negotiators
understandably thought they would be able to get something in the 58-60 percent range. The
parties reached a stalemate that could not be resolved before the entire season was lost. It thus
behooves management negotiators to begin with offers that are sufficiently parsimonious to give
them bargaining room once the serious talks begin. This allows the political union negotiators to
talk them up and take credit for the gains they achieve.
Negotiating parties occasionally encounter difficult topics that neither side can concede
without a substantial loss of face. How can such issues be handled without the need for a winloss result? If the term is not crucial, they can resort to constructive ambiguity. They may include
language pertaining to this topic that actually says nothing coherent. Both sides are then able to
claim that they did not give in. If the issue subsequently arises they can try to resolve it
themselves under less difficult circumstances. If they are unable to achieve a mutually acceptable
outcome, they can invoke the contractual grievance-arbitration procedures and ask an outside
neutral to decide the matter. The losing party then has someone to blame – that pointed-headed
arbitrator – and the labor and management representatives can continue with their relationship
without unnecessary acrimony.
Over the past fifty years, the decline of union membership has greatly affected bargaining
interactions. By the mid-1950s, 35 percent of private sector workers were union members who
had their employment terms determined through collective bargaining. As the U.S. was
transformed from a manufacturing to a service and white-collar economy and American firms
were directly affected by global competition from emerging countries, the elevated labor costs
associated with unionized personnel became detrimental to many corporations. Nonunion
companies hired law firms and labor consultants to keep their firms nonunion, and organized
companies began to seek ways to get rid of their unions. At the same time, Labor Board and
court decisions made it easier for companies to “predict” job losses and other dire consequences
associated with unionization. Unions sought to organize post-industrial entities like Wal-Mart
and McDonald’s, but they used blue-collar techniques to appeal to white-collar and service
personnel who thought of union membership as “lower class.” Union membership steadily
declined, resulting in a union membership rate today below 8 percent. If this trend continues and
unions are unable to develop new organizing plans that appeal to post-industrial workers, they
will become irrelevant outside such traditional industries as autos, steel, and electrical
manufacturing.
In their recent book, What Workers Want (1999), Professors Richard Freeman and Joel
Rogers found that over 80 percent of employees would like some form of collective interaction
with management, with almost half of these respondents indicating an interest in traditional labor
unions. On the other hand, most of the individuals indicating an interest in unionization
suggested a desire for less adversarial labor-management relationships. Representative unions
can no longer sit down with employer agents and simply negotiate the terms they would like to
have. In out global economy, they must be cognizant of the impact of their bargaining decisions
on firm competitiveness. If they unduly increase labor costs or decrease productivity, corporate
earnings will decline and workers will be laid off. They have to work together as partners to
achieve results that reward employees for their contributions to firm success, while
simultaneously recognizing the need to keep companies competitive.
A number of successful unionized firms have taken courses together on interest-based
bargaining designed to teach labor and management representatives how to look for ways to
satisfy the underlying needs of both sides simultaneously. Despite the recency of this approach,
its underpinnings were recognized forty years ago by Professors Richard Walton and Robert
McKersie in their classic book A Behavioral Theory of Labor Negotiations (1965). They
discussed the need for participants to prioritize their underlying interests and look for ways to
maximize the returns achieved by both sides. When difficult issues are raised, parties may use
separate committees to explore different options that might be employed to handle these matters.
These groups can meet away from public bargaining sessions and look for innovative
alternatives that might not have been used previously. Without the glare of public scrutiny, they
can explore options that might not be ultimately adopted without the fear of embarrassment.
Management officials often complain to Labor Law teachers about how difficult it is to
determine whether particular topics are mandatory bargaining subjects that must be discussed
with union agents. Some subcontracting decisions that merely involve the substitution of less
expensive outside workers for present employees must usually be bargained about, while other
decisions involving partial department closures or other fundamental changes in the business do
not have to be discussed. The Supreme Court endeavored to draw a clear line between these
areas in First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), where it indicated that
“in view of an employer’s need for unencumbered decision-making, bargaining over
management decisions that have a substantial impact on the continued availability of
employment should be required only if the benefit, for labor-management relations and the
collective bargaining process, outweighs the burden placed on the conduct of the business.”
When basic firm decisions are based primarily on labor cost considerations and do not involve
significant changes in company operations, bargaining will generally be required. On the other
hand, when the decisions do not concern labor costs and do involve changes in basic operations,
bargaining will not be necessary. Where the line between required bargaining and nonmandatory bargaining is to be drawn is never clear. This fact should not, however, frighten
management officials.
As noted earlier, the duty to bargain does not require either party to agree to particular
demands or the making of concessions. If company leaders are contemplating changes that might
arguably be subject to mandatory bargaining, they should resolve doubts in favor of collective
negotiations. They should inform union officials of their contemplated changes and offer to
bargain. They should carefully explain the reasons for the proposed changes and request a union
response. If the union is able to respond appropriately to their needs, company officials may
decide to retain their current workers and adopt the union proposal. If union negotiators do not
work to satisfy firm concerns, the company negotiators need only bargain to a good faith
impasse. At this point, they may legally effectuate their last proposal despite union objection.
They have to be certain to satisfy two crucial prerequisites to such unilateral changes. First, they
must be sure they have reached a good faith impasse. This is when after thorough bargaining, the
parties have reached presently irreconcilable positions. When in doubt, they should offer to have
another bargaining session to be certain they have reached this point. Second, the changes they
unilaterally implement cannot be more generous to the workers than those already offered by
their side at the bargaining table.
Individuals who must participate in collective bargaining interactions should take a
course on negotiating if they can and should read several books on the negotiation process. They
should prepare for long, drawn-out talks which will take time to develop, both because of the
many issues to be addressed and the political nature of union representatives. They should also
recognize that most bargaining encounters will not be resolved until shortly before the existing
contract is due to expire. If labor leaders agree to terms too early, unit personnel may suspect
they have become too cozy with management and vote against contract ratification. If, on the
other hand, management negotiators allow the union agents to take credit for the gains achieved
through their last-minute efforts, the affected employees are likely to be pleased with the final
results.
Copyright 2005 by Charles B. Craver
Charles B. Craver is the Freda H. Alverson Professor of Law at George Washington University.
He is author of Effective Legal Negotiation and Settlement (5th ed. 2005 LEXIS), The Intelligent
Negotiator (2002 Prima/Crown), and Can Unions Survive? (1993 N.Y.U. Press). He is also
coauthor of law books on Labor Relations Law and Collective Bargaining. Over the past thirty
years, he has taught negotiating skills to lawyers and business persons throughout the U.S.,
Canada, Mexico, England, Austria, and the People’s Republic of China. He can be reached at:
ccraver@law.gwu.edu