Tilting the Scales - Controlling Collective Bargaining through Regulatory Mandates

This article is intended as a part of an ongoing strategy guide for in-house and outside general counsel that provides a primer on the growing union friendly changes in federal and state labor Relations. We shall cover three topics: (1) union organizing models under the National Labor Relations Act and the Railway Labor Act – the primary statutes applicable to the modes; (2) the impact of federal project labor agreements on Transportation Industry Construction and (3) a look into what’s new, focusing on first steps towards mandating so-called “sectoral collective bargaining.”

I.          Collective Bargaining – An Overview

There are two dramatically different models that define how union organizing functions in the transportation industries. The first, and most common arises under the National Labor Relations Act, and defines the choice to organize by the narrowest most representative group of workers, known the bargaining unit. The primary model is worker’s pre-approval, usually through authorization cards, followed by an election conducted by the National Labor Relations Board.

Under this model, there are two variations – one, in construction, permits employers to directly negotiate with a labor union under a so-called pre-hire agreement. Worker choice as represented in a Board election or authorization cards, is not required. In other industries employers and unions can negotiate so-called a “neutrality” agreement in which employers agree not to continue to campaign while the union seeks authorization cards and respect the result if a majority of the unit is obtained.

At times, the government has attempted to impose such “neutrality” agreements directly on government contractors for services. Where imposed in this fashion, without employer agreement, such enactments have failed appellate review.  

The size and scope of the putative bargaining unit is often the determining factor in organizing success – because individual groups of workers are simpler to unify. Employers often seek to have the bargaining unit defined more broadly, either regionally or nationally, because the more diverse unit is more difficult to achieve a majority.  Indeed, it is common to find substantive differences even in members of the same union but in different locals.

In industries covered by a different statute, the Railway Labor Act, typically rail, air and related fixed base or hub operations, a company wide unit is the legal model. This kind of unit is much harder to successfully organize. In industries with broad uniformity and common concerns amongst workers, like airline pilots and flight attendants, it is the norm. At the same time, regulated transportation industries are insulated by prohibitions against certain organizing tools, such as the threat to picket, as the RLA provides for mandatory cooling off period, enforceable by federal court injunctions.

Related to the above are legislative techniques intended to tilt the balance in favor of workers and unions by other techniques.  For example, the “living wage” or super minimum wage movement had its roots in airport related operations, which required mandated wages and benefits even without a union being certified. These approaches were first implemented in airport shuttle operations. Another variation seeks to control how organizing occurs – for example, successorship requirements in government contracting.

Airport protocols often recognize that air support maintenance contracts are awarded to specialty contracts, and unions regularly succeed in implementing successor bargaining agreements, which require either the recognition of the prior contracts labor agreement, or mandating bargaining by a new contractor wit the old union or its members.

II.         Project Labor Agreements

In construction, prevailing wage requirements serve much the same purpose. The Project Labor agreement is closely related to the pre-hire agreement, except that it becomes an owner mandate.

The new proposed regulations expanding these requirements for large federal projects are currently open for comment.

DoD, GSA, and NASA are proposing to revise FAR subpart 22.5, Use of Project Labor Agreements for Federal Construction Projects, to reflect the change in policy pertaining to the use of PLAs. While the reasons for using PLAs remain largely unchanged from the previous policy, use of a PLA is no longer discretionary for large-scale Federal construction projects. Agencies will be required to use a PLA for large-scale Federal construction projects unless an exception applies. The E.O. also expands the definition of “construction,” raises the threshold for a large-scale construction project from $25 million to $35 million and establishes a series of exceptions to the PLA requirements. A summary of the proposed changes follows.

The threshold for a large-scale construction project is increased from $25 million to $35 million. This threshold will be subject to the periodic adjustment for inflation of statutory acquisition-related dollar thresholds in accordance with FAR 1.109, 41 U.S.C. 1908, and section 2(c) of E.O. 14063.

FAR 22.503 is revised to reflect the change in policy that mandates agencies to require the use of PLAs when awarding Federal construction contracts that meet the threshold of a large-scale construction project unless an exception applies. Agencies may continue to require PLAs for projects that do not meet the $35 million threshold at their discretion. The proposed rule maintains existing FAR guidance that agencies may use when making a decision to require a PLA for such a contract.

The authority to grant an exception is added at FAR 22.504(d). The exception may be granted in each of the following circumstances, as provided in the E.O.:

1. Requiring a PLA would not achieve economy and efficiency in Federal procurement, as described in 22.504(d);

2. Requiring a PLA would substantially reduce the number of potential bidders so as to frustrate full and open competition, i.e., where adequate competition at a fair and reasonable price could not be achieved; or

3. Requiring a PLA would be inconsistent with statutes, regulations, other E.O.s., or Presidential Memoranda.
The decision regarding whether to grant an exception for an order under an IDIQ contract should be made prior to issuing the notice of intent to place an order.

(see https://www.federalregister.gov/documents/2022/08/19/2022-17067/federal-acquisition-regulation-use-of-project-labor-agreements-for-federal-construction-projects)

III.        Enter the Future – Sectoral Bargaining - A look at California’s AB 257—the Fast Food Accountability and Standards Recovery Act

Control of labor relations at the government level is well known to those in our industries with international operations.

Different countries have been leaders in this area- In Canada (especially in the province of Quebec)  for example, labor agreements are registered at the province level. (see, e.g. https://www.canada.ca/en/employment-social-development/services/labour-relations/collective-bargaining.html)

In New Zealand, private sector wages are recognized as prevailing, and state mandated. (see, e.g.  https://www.employment.govt.nz/)

Now, for the first time, California’s legislature is considering a groundbreaking effort to implement state mandated sectoral collective bargaining that resembles a version of the Railway Labor Act model.

California has long had an Industrial Welfare Commission (“IWC”), which set working conditions for different industries.  (The author was appointed to and served on the transportation panel) (https://www.dir.ca.gov/iwc/iwc.html).

The published wage orders occasionally varied overtime rules but never set wages or bargaining requirements. After the legislature defunded the IWC, the California Secretary of Labor and Workforce Development has continued to update those orders in minor ways, as in updating the existing minimum wages. During the controversy of gig drivers and independent contractors’ unsuccessful efforts were begun the revise the IWC panels to create various exceptions, including ones tailored to trucking and logistics, especially owner-operators serving the brokerage industries.

The California “FAST Recovery Act” (nominally aimed at the fast food industry). (Seehttps://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB257) purports to empower local government to act as its own “industrial welfare commission” but on a far broader scale.  Originally drafted by labor side  proponents (see https://fightfor15.org) this legislation, if enacted it would authorize any California municipality with at least 200,000 residents to set up a council like the state version to set fast-food labor standards in a local area envisioning a 13-person council composed of workers, unions, employers and state officials. Following the IWC model they could establish minimum wage and working condition standards which would mandate living wages or higher or impose more comprehensive union agreement equivalent labor standards.  Such mandates could extend through the ownership chain to all covered employers, including subsidiaries and franchise operations.

Such an approach could also create penalties at the regulatory level, unfair labor practice charges or even authorize bounty hunter style civil enforcement entitlements.

AB257  is part of continuum of new union inspired government mandates efforts like the Big Box standards( See https://www.cp-dr.com/articles/node-638) for an excellent summary  or the efforts to legislative hours of mandatory overtime work and scheduling.

CONLUSION AND SUGGESTIONS

Labor relations and collective bargaining are entering a brave new world in which government will play an increasing more active role. Staying tune for what’s next is helpful, but the most challenging task for employers is updating their knowledge of what is being required of them. A special alertness in issue spotting in new project creation, joint ventures and mergers is now basic due diligence in deterring the labor workforce-based risk factors. 

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