Legal Requirements for Collective Bargaining

1. Legal Requirements for Collective Bargaining 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.

2. 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.”

3. 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

4. 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 Electric’s Lemuel Boulware’s strategy of making a ‘reasonable’ offer and then refusing to budge.

5. Legal Requirements for Collective Bargaining Mandatory, Voluntary and Illegal issues (Borg-Warner, 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

6. 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

7. 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

8. 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

9. Typical Bargaining Process • Figure 5-2, p. 207 of Carrell and Heavrin

10. Setting Goals: Flanagan’s 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 • Role of homogeneity vs heterogeneity of preferences • More heterogeneity means less satisfaction • Union stability may be threatened if heterogeneity is prevalent • Median voter preferences matter

11. Setting Goals: Flanagan’s Model of Public Goods Problems Multiple issues—no 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)

12. 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

13. 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

14. 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

15. Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions Wage Concession W* Resistance T* Time

16. Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions HIGH UNEMPLOYMENT RATE Wage C C’ W* R R’ T* Time ?

17. Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions LOW UNEMPLOYMENT RATE Wage C’ C W* R’ R T* Time ?

18. 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

19. Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions ROLE OF STRIKE DATE Wage C’ C ? W* R’ R T* Time

20. Bargaining Theory: Hicks’ Theory of Union Resistance and Employer Concessions Role of uncertainty May cause parties to underpredict rival’s resistance or overpredict likelihood of concessions Strikes as Mistakes

21. 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

22. Ashenfelter-Johnson model—firm forces a strike if wage reduction will lead to long-run higher profitability Wage Resistance Strike length PV(Profit) Firm Profit Strike length S*