Union Construction and Collective Bargaining Agreements

How Trade Unions are Shaping Compliance

Recent social and political trends have brought new strength to US trade unions, placing increased pressure on American businesses to form and abide by union Collective Bargaining Agreements (CBAs.)  Trade unions across the United States have always influenced rules of the game for employers — now, unions warrant their own category of compliance.

“Compliance” is a term typically used to describe adherence to rules established by government agencies such as the Department of Labor, Internal Revenue Service, or local agencies like the California DIR or New York City Office of the Comptroller.  An employer’s need to comply is usually mandatory.  (For instance, no business can avoid paying taxes to the IRS.)

For American employers who rely on the work of skilled trades, union CBA compliance is all but mandatory as well; it is a business necessity.  Without union labor, many employers would not be able to provide services or receive any revenue from their customers, and so it is essential that they form and abide by Collective Bargaining Agreements.

How Trade Unions Work With Employers

To retain the services of union employees, an employer must go through a negotiation process with the union.  The result of these negotiations are a legal document called a Collective Bargaining Agreement.

Some aspects of CBAs are required by the National Labor Relations Board (NLRB), such as grievance procedures, wages, overtime, seniority, work practices and safety, bonuses and also procedures for layoff, discharge, recall or disciplinary action.  CBAs can also contain voluntary subjects related to the employer’s board of directors, or internal union matters.

After a CBA is reached between the union and the employer, both parties (the employer and the union) are required to abide by the agreement.

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Learn how HCM TradeSeal can help construction contractors work with multiple unions.

Examples of CBA Compliance

During the normal operation of a business, stakeholders across many departments including finance, HR and payroll must be concerned with the rules set forth in CBA documents.  Financial stakeholders must be aware of the total labor costs associated with union employees, as well as financial risks.  HR stakeholders must create policies for hiring, terminating or re-hiring (recalling) union employees, based on CBA rules.  Payroll stakeholders must also be aware of varied hourly rates, fringe benefit rates and employer benefit contribution reports that must be paid or filed with unions.

Shift Premium Pay: CBAs may require additional pay beyond standard overtime rules found in the Fair Labor Standards Act.  For example, one CBA between a public corporation and an operating engineers union describes an exact rule for Sunday pay: “Day workers who are not scheduled to work on Sundays as part of their regularly scheduled 40-hour work week will be paid double time for hours so worked on Sundays. Regular part-time or temporary employees with less than 40 hours in the week and who are required to work on Sundays shall be paid straight-time plus the Sunday premium of $6.50 per hour. Sunday work beyond 40 hours for the week shall be paid at double time rate with no Sunday premium.”

Benefits: Many CBAs specify hourly, fixed or percentage-based benefits that must be paid to union employees by craft, by tenure, or based on other variables about the work they perform.  One Collective Bargaining Agreement for supermarket employees outlines a fixed benefits that applies only to employees with at least one year of tenure: “the Employer shall contribute to the [Welfare Fund] the sum of seven hundred and twenty dollars ($720.00) per month for each appropriate full time employee on the Employer’s payroll. The contribution by the Employer will commence with the first full payroll month following the completion of twelve (12) months continuous employment with the Employer.“

Holiday Pay: Some CBAs outline highly specific requirements for pay related to holidays, or even days of work in near proximity to holidays.  One California Collective Bargaining Agreement reads as follows, with regard to holiday pay: “Pay Rate for Holidays When They Fall on a 6th Consecutive Day: Employees required to work on the sixth (6th) consecutive day in any one week and when that sixth (6th) day falls on a holiday the employee will be paid two and-one-half (2 1/2) times his or her regular salary.”

Union Influence on Agency Compliance

Directly or indirectly, rules from CBAs can impact wage, overtime, and other rules set forth by local, state and federal agencies.  Prevailing Wage is a common example of this concept – in California, prevailing wages are generally established by statistical analysis of craft wages from Collective Bargaining Agreements.

In some cases, CBA and Agency compliance rules conflict; for example, an agency may directly require an 8 hour daily overtime threshold whereas the CBA may describe a different daily overtime policy based on seniority or other factors.  In these cases, employers should seek the advice of legal counsel before deciding which HR and payroll practices to use.

CIC Solutions for HCM Partners

CIC helps HCM vendors manage accounts with advanced compliance needs. Team up with CIC to expand your support for challenging industries, ERP or CRM systems.

  • Visit the HCM TradeSeal website to learn more about union and prevailing wage payroll processing.
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