It’s not uncommon for a contractor signatory to a CBA with a local union or district council to, at some point, perform covered work in an area outside of their local’s or DC’s jurisdiction. Signatory contractors typically understand their contractual obligations to both their local and the local where work is being performed. But what about their obligations when a worker willingly travels for work from an area where the contractor is not a signatory to the local collective bargaining agreement? FCA International is providing this memo to help contractors understand their contractual obligations to both their local and the local where the work is being performed.

IUPAT “Out of Area” Clauses

Nearly all IUPAT agreements contain an “Out of Area” clause (also called “Jurisdictional Work Rule” clause or “Work Outside the Union’s Geographical Jurisdiction clause). These clauses have three main components:

  1. They require the traveling contractor to “employ not less than 50% of the workers employed on such work from among the residents of the area where the work is performed.”  All other workers, however, “shall be employed only from the Employer’s home area.”
  2. They require the traveling contractor to comply with “all lawful clauses of the [CBA] in effect in said other geographic jurisdiction and executed by the employers of the industry and the IUPAT affiliated union in that jurisdiction.” 
  3. They require the traveling contractor to pay workers who travel to the outside jurisdiction the higher of the two wages and, in most cases, the higher of two fringe benefits, with any greater amounts in the traveled-to area paid to the employee on the check.  Fringes for the traveling worker are generally required to be paid to the employee’s “home local.”

“Out of Area” clauses may be enforced both by the home local (i.e., the local with whom the contractor is signatory) and the traveling local. This is so even though the traveling contractor has not signed the CBA with the local where the work is being performed.  See, e.g., IUPAT Dist. Council 16 v. Color New Co., 2012 WL 3235101 (E.D. Cal. Aug. 6, 2012) (concluding that traveling contractor was required to comply with DC 16 agreement because the traveling contractor’s agreement with DC 36 included an “out of area” clause).

While these principles apply to most “Out of Area” clauses, each clause is different, so it is imperative for a contractor read and, if necessary, engage legal counsel to ensure that the contractor is properly applying the clause to IUPAT members who travel into the area. There may be additional CBA clauses that are applicable too. 

While contractors generally understand how to apply “Out of Area” clauses to: (i) workers who travel from the contractor’s home local (where the contractor is signatory) and (ii) workers in the foreign jurisdiction where the work is performed, there is a lack of clarity regarding how to apply the cause to (iii) workers who travel for work from an area where a contractor is not a signatory contractor (that is not the area where the work is performed).

Consider the following example:

ABC Contractor (California) Performing Work in Georgia
ABC contractor is signatory to an IUPAT local agreement in California and is performing work in Georgia. Under the “Out of Area” clause in the California agreement, ABC contractor is required to follow all terms of the local Georgia IUPAT contract.  For workers who travel to Georgia from California, ABC contractor is required to pay the higher wage (California vs. Georgia) and the higher fringe benefits (California vs. Georgia).    But, what if a worker from Illinois travels to Georgia to work on the job? In that case, because ABC contractor is not a signatory to the IUPAT agreement in Illinois, the Illinois local cannot attempt to enforce the Illinois CBA against ABC Contractor. Thus, ABC Contractor is arguably required only to follow the Georgia agreement for the worker from Illinois. Indeed, some IUPAT agreements specifically exclude “employees who travel to the jurisdiction to seek work or who respond to a job alert issued by the IUPAT.”  

As noted above, if the contractor is signatory to a contract that provides an express exclusion for (i) “employees who travel to the jurisdiction to seek work” or (ii) “employees . . . who respond to a job alert issued by the IUPAT,” then the contractor has a strong argument that it is not required to apply the Illinois wages and fringes to the Illinois worker in Georgia. The contractor may choose to do so, but its contract does not (on its face) require it.

If the CBA is silent as to employees who travel from a different jurisdiction, the contractor could still apply the Georgia agreement to other workers who travel to the state to perform work on the job, provided that the contractor is not signatory to the CBA with the employee’s home local. However, it is less clear whether the contractor would be permitted to apply only the Georgia wages and fringes to these employees. In the absence of express contract language, past practice may be instructive. 

Another potential complication is that many “out of area” clauses mandate that the contractor obtain labor “only from the Employer’s home area.”  It is unclear what is meant by “home area,” but this could give the IUPAT an argument that engaging employees from different jurisdictions (i.e., not the contractor’s signatory area or the area where the work is being performed) violates the CBA.

Bottom Line

While there is still some ambiguity regarding the application of “Out of Area” clauses to employees who travel to a jobsite in a different jurisdiction, some contractors have contract language expressly allowing them to apply a different standard to (i) “employees who travel to the jurisdiction to seek work” or (ii) “employees . . . who respond to a job alert issued by the IUPAT.”

In the absence of express contract language, contractors may be able to rely on the absence of an enforceable contract to allow the contractor to apply the local area agreement only. This position could be supported by past practice. Contractors could add clarity by negotiating contract language specifying that the “Out of Area” clause does not apply to (i) “employees who travel to the jurisdiction to seek work” or (ii) “employees . . . who respond to a job alert issued by the IUPAT.” Indeed, IUPAT locals have agreed to similar language. Additional language could be added to specify that, in such circumstances, only the CBA of the area where the work is performed will be applied to these classes of employees.

Please contact FCA International will any questions.