Turn the Tables: Demand Concessions from Your Employer

woman outdoors holds sign: "You try 10% wage cut Carmel!"

Employers have a wish list. The union should, too. Carmel Angelo was the county CEO when Mendocino County workers went on strike in 2013 against a 10 percent wage cut. Photo: SEIU Local 1021

Employers look at COVID-19 and see an opportunity to demand concessions.

Can concessions save jobs? Almost always they cannot, and certainly not in the big picture. Concessions can’t fix a collapsed market nor the 1%’s relentless assault on workers.

The best rationalization for concessions is a retreat to fight another day. Concessions may save jobs at a particular company in the short term if the union gets specific, concrete guarantees—but not without big risks. The competition will cut wages, too, and make that the new normal.

When the employer demands to open the contract, the union has a decision to make. The employer says it’s concessions or layoffs. First, do you believe it? How will you find out?

For example, say the employer proposes a 10 percent wage cut. You counter with, “Before we would consider that, you must first pay for an audit done by an auditor of our choosing.” An outside audit may cost $20,000, but the employer is asking for $300,000 worth of wage cuts. Do the facts of the audit support the employer’s demand?

Second, there are always other ways for an employer to cut costs. Is your union strong enough to force them?

Third, even if you are convinced the union may be able to save members’ jobs in the short term through economic concessions, making them is a big deal. What will you get in return? It has to be more than a “thank you” from a grateful management.

When the company asks for concessions, the union should respond with an aggressive list of counter-proposals. This approach serves several purposes:

  1. Test whether your employer really needs the concessions—or is just using a pretext to get some extra profit.

    The contract provisions I’ve suggested below are all winnable; I’ve bargained them myself. But an employer may decide they’re not worth it.

    That’s how it went at Cinetic Landis in Hagerstown, Maryland, in 2009. Hoping to take advantage of a recession, the company asked for midterm concessions on overtime, insurance premiums, a reduced work week, and restructured job descriptions. Teamsters Local 992 countered with demands similar to those described below. The employer gulped and backed off.

  2. Slow the employer down while the union ramps up a serious education and contract campaign.

    In any bargaining, most of your leverage comes not from what your negotiators say at the table but from members taking action together. Organizing should start months before a contract expires. When midterm concessions are demanded, you may be scrambling to catch up.

    You don’t want to let the employer declare impasse. You have to keep them talking—but not by giving in to their demands. Instead, make them respond to yours.

  3. Take the opportunity to fix terrible language in your contract.

    Too often contract campaigns focus only on the money items, and the rest gets rubberstamped without a careful read. Use your leverage to win stronger language that will help in future fights.

TERM OF THE AGREEMENT

Suppose your contract says: The employer shall pay the full cost of health insurance during the term of the Agreement.

When the contract expires, does the company have to continue insurance while you are in bargaining? No.

Better: The employer shall pay the full cost of health insurance.

Read through your contract, highlight the phrase “during the term of the agreement” wherever it appears, and decide whether you really want the clause to expire.

SUCCESSORS AND ASSIGNS

Existing language: The successor or assign will assume the contract for the remainder of its term. The Union will be given a copy of the purchase or assignment agreement following the transaction.

This article is critical when the company is in hot water, because private equity vultures would like to buy your company, gut it, and re-sell. Here’s a stronger rewrite:

The successor or assign will assume the contract for the remainder of its term. In the event the Employer fails to require the purchaser, transferee, lessee, assignee, receiver or bankruptcy administrator to assume the obligations of this Agreement, the Employer (including partners thereof) shall be liable to the Local Union and to the Employees covered for all damages sustained as a result of such failure to require the assumption of the terms of this Agreement, but shall not be liable after the purchaser, the transferee or lessee has agreed to assume the obligations of this Agreement. Corporate reorganizations by a signatory Employer, occurring during the term of this Agreement, shall not relieve the signatory Employer or the reorganized Employer of the obligations of this Agreement. The Union will be given a copy of the purchase or assignment agreement following not less than 30 days prior to completion of the transaction.

GRIEVANCE DEFINITION

Existing language: A grievance is a dispute over interpretation or application of this agreement.

This is poor because it does not allow a grievance beyond the four corners of the contract. It’s certainly not ready for COVID issues.

Better: A grievance is any dispute over terms and conditions of employment.

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Best: A grievance is any dispute between an employee(s) or the Union with the Employer.

This language would allow, for example, arbitration over a dispute about paying a stock dividend when wage cuts have taken place. You’d need to couple it with bargaining over various permissive subjects (see below).

STRIKE

What your contract may say now: There shall be no strike, work stoppage, sympathy strike, slowdown, protest of any kind, etc. during the term of the agreement.

Better: There shall be no strike, work stoppage, sympathy strike, slowdown, protest of any kind, picketing, etc. during the term of the agreement.

A sympathy strike can be simply refusal to cross the picket line of another union—for instance, suppose the janitors at your workplace go on strike. Sympathy strikes and protesting are both concerted activities protected by the National Labor Relations Act.

WAGE CONCESSION

Employer proposal: Employees will have a 10 percent wage cut.

Better: Employees will have a 10 percent wage cut. This term expires when COVID-19 has been at reopening stage 5 for three months or on March 23, 2021, whichever comes sooner.

SUBCONTRACTING

Most management rights clauses give employers broad authority to subcontract. This language found in many Teamsters Local 705 contracts can restrict that right:

Subcontracting/Diversion of Work.

(1) The Employer will not subcontract, transfer, lease, assign, or in any other manner convey in whole or part any bargaining unit work to any other person, plant or entity, unless otherwise agreed to in writing between the Union and the Employer,

(2) that each person who performs subcontracted overflow loads shall receive the full economic equivalent of the wages, hours and other conditions of employment provided for in this Agreement, and

(3) that subcontracting shall not be used by the Employer as a subterfuge to violate this Agreement, or to avoid hiring additional Employees to operate existing equipment or obtaining additional equipment to be operated by them or existing Employees, and

(4) prior written notice of the subcontracting is provided to the Union.

The first clause forces the employer to deal with the union if it wants to contract out. The second diminishes the economic motive for subcontracting. The third gets the motives out in the open and disallows them.

SENIORITY

Do your members have recall rights for only one year after a layoff? Maybe it should be five years.

PERMISSIVE SUBJECTS

Some people have the mistaken impression that if something is a “permissive subject of bargaining,” it’s illegal to bargain over. Not true!

What it does mean is that if you go on strike over a permissive subject (rather than a mandatory subject, such as members’ wages or benefits), your strike loses the minimal legal protections of the National Labor Relations Board. Striking over a permissive subject may make the union liable for paying damages for the employer’s losses.

But the union can certainly make proposals on permissive subjects, such as management’s salaries and benefits. For instance:

Employees and all of management will have a 10 percent wage cut. No alternate compensation such as car allowance, stock, etc. will be given to management. No increase of management compensation will take place without a full restoration of employee wages.

No stock dividend will be paid until employee wages are returned to the wage table included in the 2019 agreement.

Our union represented workers at a small family-owned business where three family members who performed no services whatsoever were receiving an annual car, car insurance, health insurance, and a modest salary. Guess who got removed as a pre-condition for the union to even consider any wage concession?

This employer wanted to reduce members’ wages, but we moved them to a one-year freeze and a monthly review of expenses and receivables. Eighteen months later, we returned to the original multi-year wage table and the company was healthy and in the black.

Richard de Vries is a 25-year union representative at Teamsters Local 705 in Chicago. He teaches classes with the Rocky Mountain Labor School.

A version of this article appeared in Labor Notes # 498. Don't miss an issue, subscribe today.
Turn the Tables: Demand Concessions from Your Employer Employers look at COVID-19 and see an opportunity to demand concessions. Can concessions save jobs? Almost always they cannot, and certainly not in the big picture. Concessions can’t fix a collapsed market nor the 1%’s relentless assault on workers. The best rationalization for concessions is a retreat to fight another day. Concessions may save jobs at a particular company in the short term...