Employers Paying Under A Union Contract: “There Must Be Some Kinda Way Outa Here”

Authored by Robert S. Seigel

Oct 26, 2015

Bob Dylan wrote these words; Jimi Hendrix memorably sang them. The NLRB does not believe them. Let me explain…

Your union contract has expired. You are still negotiating with the union but the expired contract states, in substance, that you are only obligated to contribute to union benefit funds during the term of the contract. The trust agreement for the fund also ties the obligation to contribute to the existence of a current collective bargaining agreement (CBA). You have not agreed with the union to extend the contract, so you believe you have no contract and you can stop contributing to the union funds.

You are wrong; at least according to two recent National Labor Relations Board (NLRB) cases. According to the two NLRB decisions, even if an employer’s “contractual” obligation to pay a particular benefit ends on expiration of the contract, the employer’s obligation under section 8(a)(5) of the National Labor Relations Act (NLRA) (the so-called “statutory obligation”) continues. Therefore, the payment can end only if a new contract is negotiated ending it or the parties reach an impasse in bargaining and the employer’s implemented final offer does not require the payment.

The first case, The Finley Hospital, 362 NLRB No. 102 (2015) considered the legality of the employer’s decision not to grant raises on its nurses’ anniversary dates. The expired CBA stated that for the duration of the agreement the hospital would adjust nurses’ pay on their anniversary date upwards by 3%. The NLRB ruled that while the union waived its contractual right to require the increases, it never waived its statutory right. Therefore, the employer was not entitled to end the benefit upon contract expiration while the parties were still negotiating. The NLRB followed the exact same “logic” in Marina Del Rey Hospital, 363 NLRB No. 22 (2015). In that case, the benefit at issue was payment into the union’s Industry Education Fund. The contract and the plan trust agreement both tied the obligation to contribute to existence of a current CBA. Again, the NLRB ruled that the contract language and the language of the trust agreement waived the union’s contractual right but not its statutory right to continued payments.

The lesson drawn from these cases is two-fold.

  1. If when negotiating a new CBA, the employer intends on expiration of the agreement to end its obligation to make a particular payment or take a particular action required by the terms of the agreement, it must state that intention clearly and unequivocally. The contract must state that upon expiration of the contract, the employer’s obligation under the contract and under the NLRA (or any other state or federal law) to make the payment or take the action will terminate.
  2. If the employer’s current contract does not contain this type of explicit statutory waiver language, it probably will not have the right to end the benefit merely because the contract expired.

If you have any questions about Employers Paying Under A Union Contract or any other labor law matter, please do not hesitate to contact our Labor Relations Team.

Page 1 of 11