2010 News

Contract expirations and extensions in the private sector

06.28.2010

From the Massachusetts Nurse Newsletter
June 2010 Edition

Joe TwarogBy Joe Twarog
Associate Director, Labor Education & Training

All too often, labor contracts are negotiated and settled well after the contract expires. As a result, the union members often wonder what happens to the contractual terms and their benefits in the interim.

In the private sector when the contract expires, all terms and conditions of the collective bargaining agreement continue and are in full force until a new agreement is reached. This means that the wage scale is still intact, as well as seniority, holidays, differentials, sick leave, leaves of absence, health benefits, etc.

But some contract clauses are subject to expiration with the contract, including:

  • No strike/no lockout 
  • Dues deduction
  • Arbitration
  • Management rights

The no strike/no lockout clause automatically expires with the contract. This means that if the union is considering exercising the option of a job action/strike, the union will have to let the contract lapse with no extension. This is what the MNA did recently at Morton Hospital when a strike vote was scheduled as contract negotiations were going very poorly. Once the union does not agree to a contract extension, the contractual “no strike” clause is no longer in effect.

The dues deduction clause is also subject to expiration with the contract. But unlike the “no strike/no lockout” clause, this does not occur automatically. The employer has to take action informing the union that it will no longer automatically deduct dues. The MNA has short-circuited this possibility in many contracts with MNA Direct in which the employer is not involved in the dues process at all. But even in contracts that have traditional dues deduction language and the employer chooses to stop the deductions, it provides an opportunity for the union to organize and collect dues itself.

The arbitration clause is similar to the dues deduction clause in that it does not expire automatically. The employer has the option to not recognize arbitration for any grievance that occurs and is filed during the open period (when there is no contract in effect.) However, the union can remedy this with the settlement of the contract by including the right to file such a grievance for arbitration.

Finally, the management rights clause also expires with the agreement—automatically (Racetrack Food Services, 353 NLRB 76, Dec. 31, 2008, and The Bohemian Club and UNITE/HERE Local 2, 351 NLRB59, Nov. 19, 2007). “A contractual reservation of managerial discretion does not extend beyond the expiration of the contract unless the contract provides for it to outlive the contract” (Blue Circle Cement Co., 319 NLRB 954 (1995). This means that all of the rights that are granted in the management rights clause are no longer in effect. The union can issue demands to bargain over virtually all of the items in the expired clause before the employer acts upon them.

Unfortunately, this is a powerful instrument for the union that is seldom used. Employers universally think that (with the sole exception of the “no strike” expiration) when a contract expires, they are in a position of strength by threatening to cut off dues and arbitration. However, with the expiration of the management rights clause, the union can force the employer to negotiate over all “prerogatives” that formerly were in the sole discretion of management, including seemingly minor items.

Contract extensions

With all of this stated, most successor agreements that are still being negotiated as the expiration date passes are often extended by the parties. Such contract extensions preserve all of the clauses of the contract until the parties either reach agreement on a new contract or let the contract lapse and the union engages in a job action.

There are several ways to formulate a contract extension. All extensions should be in writing. The following are several methods.

Session to session. This option provides the most flexibility for the union. If a particular bargaining session does not move the process forward, then the union can decline to extend the contract. This sends a clear message to the employer that a strike is a definite possibility.

For a defined time period. This option is one in which the parties agree to extend the contract for a stated time period—two weeks or 30 days, for example — but puts less pressure on the employer. It is less flexible than the previous option, but still allows time to negotiate and settle within an agreed upon period.

Until a new agreement is reached. This is the way that management would propose to extend the contract. If the union agrees to such an extension, this means that the union has in effect told management that it has no intention of considering a strike or any job action that is mentioned in the “no strike” clause. This is the least favorable option and not a good choice for the union.

Contract expiration date as a target

In any case, the expiration date of a contract is a powerful tool that can and should be used to the union’s advantage. The expiration date should be the target date for a successor agreement to be reached. Labor’s experience is that once that date is passed, regardless of extensions, the employer starts to talk about “retroactivity” and uses it as a hammer against the union by threatening a loss of such retroactive wage increases. The longer the time passes after the expiration date, the bigger the issue of retroactivity becomes. It is a sword hanging over the union’s head and encourages a less advantageous settlement.

By ignoring this deadline, the union in effect gives a huge advantage to management in the bargaining process. Some unions have a clear and well-established culture regarding contract expiration dates that they use effectively to their advantage. In the United Auto Workers, if a successor agreement is not reached by the deadline, a job action or strike usually ensues, summed up in the slogan “no contract, no work!”

Such a proactive labor philosophy gives the union tremendous leverage in the bargaining process and avoids the unnecessary struggle over the management-created issue of retroactivity.

FPO