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March 29, 2016

While I am not a labor lawyer per se, since I represent general contractors and subcontractors I sometimes get involved with a union issue. With the downturn in the economy and its devastating effect on the construction and development industries causing many contractors to fail, unions are hurting and their pension and health and welfare funds are taking a hit. One of my clients was recently sued by a union trying to collect contributions owed by another company that had gone out of business and was owned and operated by relatives of some of the existing company owners. The union claimed the existing company was a successor in interest of the company that had gone out of business. I had represented the former company and knew its ownership structure and also that of the existing company and how the existing company came to be organized. Fortunately, I was able to put together in a letter an explanation of how the existing company was distinct and separate and not a related or successor entity to the company that had failed. I showed the union’s attorney the lawsuit was without merit and baseless and let it be known albeit politely that if the lawsuit was not dropped we would seek to have the Court impose sanctions for the filing of a frivolous lawsuit. The union’s attorney agreed to dismiss the suit.

Since I do get involved occasionally with a labor issue, a recent United States Court of Appeals decision caught my eye. It involved a union cement mason worker doing non-bargaining unit work and whether the employer had to make contributions for the non-bargaining unit hours worked. The district court said yes and the Appellate Court affirmed.

The employer had entered a Memorandum of Joint Working Agreement with the local of the Cement Masons Union. This MOA adopted by reference all the Collective Bargaining Agreements between the Union and various employer associations in the geographical jurisdiction of the Union. One of the employers union workers had done non-bargaining unit work such as painting, installing hardwood floors and demolition. The employer did not make contributions based on these hours worked. The Union did an audit and then brought suit to collect contributions for the non-bargaining unit work performed.

There were two Collective Bargaining Agreements at issue and both stated that contributions had to be made for “each hour worked by employees covered by the CBA’s.” The employer tried to argue that certain language in the MOA limited the required contributions to only bargaining unit work. The employer pointed to language that stated the MOA only applied to employees doing bargaining unit work. The US Court of Appeals did not agree that this language placed a limitation on the work for which contributions had to be made. The Appellate Court ruled that all this language in the MOA did was establish that for an employee to be covered under the CBA he or she had to be an employee who does bargaining unit work. The MOA’s language did not limit the CBA’s coverage to employees doing only bargaining unit work. The employer was ordered to make contributions for the non-bargaining unit hours worked.

If you have a MOA with a local of a union that adopts a collective bargaining agreement, make sure you have a copy of the CBA and that you understand its provisions. You can rest assured the union will know what it provides and in this economy the unions are going to take action to enforce these agreements and get every dollar they can for their pension and health and welfare funds. There is nothing wrong with this so long as both parties know the rules and play by them.