What Contractors Need to Know About Reopening CBAs

As contractors prepare for another year of bargaining, it’s important to remember that there are both statutory and contractual-required notices that must be provided. Indeed, as outlined below, failure to provide the required notices can have serious implications for bargaining and any potential work stoppages.

“Evergreen” or “Automatic Renewal” Clauses

It is common for a labor agreement to contain an “evergreen” or “automatic renewal” clause whereby the CBA is automatically renewed (usually from year to year) unless one party gives notice (usually more than 60 days) prior to the contract expiration date of its intent to terminate the contract and/or renegotiate a new agreement.

To calculate the deadline, count backwards from the last day that the CBA remains in effect (called the “termination day.”) Be sure to include the last day (or “termination day”) in your calculation. Importantly, the timeliness of such notices is governed by the “date of receipt” and not the “date of mailing.”

Consider the following examples:

As noted in these examples, failure by either party to provide the required notice will typically result in the renewal of the agreement for a certain period of time (typically one year). If this happens a contractor could potentially refuse a request by the union to bargain a new contract after receipt of an untimely notice.

Indeed, an untimely notice to reopen the CBA can be treated as a request to reopen an existing CBA. In that case, the contractor could simply decline to reopen the contract during the renewal period. This would typically mean that bargaining unit employees would not receive a pay increase for the renewal period, unless an annual increase was built into the contract already.

This, of course, raises practical issues with whether a contractor would decline the Union’s untimely request to reopen the CBA.  For example, the next bargain after the renewal period would likely be more confrontational and the union would likely seek a much larger increase after the renewal period (to make up for any missed increase).

One potential alternative (short of reopening the CBA pursuant to the untimely notice) is to keep the CBA in place, but also offer to engage in a limited-issue bargain. This would keep the CBA in place for the renewal period (including any no-strike language), but allow the parties to agree to some wage adjustment (or even a new longer-term contract) without the threat of a strike.

Given the legal pitfalls with receiving an untimely notice, contractors would be well-served to contact labor counsel.

Statutory Notices to FMCS and Any State Mediation Agency

Separate from the contractually-required notice, Section 8(d) of the National Labor Relations Act (NLRA) requires the “initiating party” in any collective bargaining to provide certain notices to the Federal Mediation and Conciliation Service (FMCS) and to “any State or Territorial agency established to mediate and conciliate disputes within the State or Territory where the dispute occurred.”

Typically, the party that gives a “notice to reopen” or “notice to terminate” to prevent the renewal of the CBA pursuant to an “evergreen” or “automatic renewal” clause (as described above) is considered the “initiating party.” If the employer is the “initiating party” and fails to provide the required notices under Section 8(d), it violates its duty to bargain under Section 8(a)(5) and precludes the employer from altering terms or conditions of the collective-bargaining agreement or engaging in a lockout to enforce its proposed changes.

If the union is the “initiating party” and fails to provide the required notices under Section 8(d), any work stoppage by the union would violate Sections 8(d) and 8(b)(3). There are also significant consequences for employees who strike before the proper notices are provided: Section 8(d)(4) provides that each striker “shall lose his status as an employee of the employer engaged in the particular labor dispute, for the purposes of sections 8, 9, and 10” of the NLRA.

Parties typically notify the FMCS by mailing, faxing, or e-filing a “Notice of Bargaining” (also called an “F-7 Notice”) with FMCS. Notifying FMCS, however, is not enough.  Section 8(d)(3) also requires notification to “any State or Territorial agency established to mediate and conciliate disputes within the State or Territory where the dispute occurred.” The NLRB has made clear that the duty to notify the State agency is independent of the duty to notify FMCS. 

For example, in Meatcutters Local 576 (Kansas City Chip Steak), 140 NLRB 876 (1963), the union notified the FMCS but failed to notify the Kansas State labor commissioner.  The Board found that the Kansas labor commissioner was a State agency “established to mediate and conciliate disputes” within the meaning of the NLRA and that by failing before striking to notify the Kansas State labor commissioner of the existence of the labor dispute, the union violated the NLRA.

Thus, where a union provides the notice to reopen negotiations, contractors should ensure that the Union has satisfied its obligations under Section 8(d) of the NLRA by notifying both FMCS and any state mediation agency.  If it has not done so, then the Union could violate the NLRA by engaging in a strike without providing the required notices.

Bottom Line

As you can see, what seems like a simple process (i.e., reopening the CBA) actually implicates both the CBA and the NLRA. Contractors should take the time to carefully review their CBA to ensure that any reopener notices comply with the “evergreen” or “automatic renewal” clause in the CBA. 

What’s more, even if the union provides timely notice to reopen the contract, it is possible that the Union failed to follow the statutory notice requirements provided in Section 8(d). This could limit the union’s ability to engage in a work stoppage before the required notices are provided.

Signatory contractors do not need to go it alone, however. Contractors would be well-served to engage legal counsel to ensure the Union complied with its contractual and statutory notice obligations. The FCA team is also available to answer questions and connect you with FCA legal counsel.