Labor’s Hard Lessons


One thing organized labor has learned from its dealings with management is that, basically, anything that can be used against a union will be used.  Take specific accommodations, for example.  No matter how limited or exceptional a particular arrangement starts out, if it’s seen as something that can be used to management’s advantage, every company in America will try to use it wherever it can, as often as it can, in every way it can, no matter what the circumstances. 

Three examples of good faith accommodations that have more or less back-fired on the union are:  bonuses in lieu of a general wage increase (GWI), the two-tier wage configuration, and “last chance” agreements.

First introduced in the 1970s by the auto industry, the “bonus” (a lump sum payment in lieu of the traditional GWI) was the Big Three’s way of compensating UAW (United Auto Workers) members while, simultaneously, applying the brakes to their escalating labor costs.  Getting the union to agree to a 4-year contract that consisted of yearly bonuses, and left hourly rates unchanged, represented a huge savings.

The membership didn’t have to be told the industry was in trouble; they already knew it. Ford, Chrysler and GM had dug themselves a deep hole and, alarmingly, had dragged the union into it with them. 

For that reason, despite the UAW’s grave reservations, the membership reluctantly agreed to accept lump sums.  After all, car sales had suffered from foreign competition, inflation was spiking, heavy manufacturing was being moved to the Sun Belt, and, ominously, they were seeing the first wave of what would turn out to be massive layoffs.

Moreover, because many workers saw the main difference between bonuses and a GWI as one of money going into your pocket all at once and money coming at you in increments, the format didn’t seem like too much of a sacrifice.  Only upon closer inspection did they realize what they were giving up. 

Overtime is computed at time-and-a-half of the hourly rate, which means that, under the new agreement, all overtime (and the UAW worked prodigious amounts of it) would be computed at the old wage.  Similarly, holiday pay is computed at the hourly rate, as is worker’s compensation, state disability, sick leave, call time and vacation pay. 

In the late seventies the UAW averaged 13 paid holidays a year, and a 20-year employee received six weeks of vacation.  That’s eight work weeks right there, not even counting overtime. With their bonus money long since spent, and no raises on the horizon, employees found themselves being compensated at the same rate they’d earned four years earlier.  But it was an “emergency” situation and they were willing to sacrifice.

Of course, what happened next was predictable.  Once word spread that the Big Three had gotten the UAW to take lump sums (albeit in response to an industry crisis), virtually every company in America tried to foist that same arrangement on their employees—even companies that were flush with money and had no reason to resort to it.  Once lump sum payments were in play, everybody tried to exploit them.  As a consequence, they are now ubiquitous.

The same thing happened with the two-tier wage configuration, and again, it was the auto industry who first served it up.  The Big Three came to the union, hat in hand, imploring them to provide financial relief to an industry that was under siege.  Looking for long-term payroll savings, the companies promised the union that existing employees could keep most of the goodies they already had in return for severely limiting what future new-hires could receive—not only in wages and benefits, but in seniority, job progression, and other work rules, as well.

To their credit, many locals voted down these offers—resolutely turned their backs on attractive wage and benefit packages—arguing that agreeing to them would be tantamount to selling out their future union brothers and sisters.  It was a noble gesture.  Try to imagine a group of investment bankers or lawyers turning down guaranteed money out of concern for those who might follow them into the profession.

But as the auto industry became increasingly depressed (layoffs ultimately reached hundreds of thousands), the two-tier wage configuration was reluctantly voted in at several locals.  And again, as soon as word spread, other companies around the country, in every conceivable industry, began insisting that workers accept the same arrangement, and they did it not because they were on the ropes, but because it was available.  Today, the two-tier format (variously called “longevity rates” or “platform wages”) is found everywhere.

Which brings us to “last chance” agreements (LCAs).  Essentially, an LCA is an agreement where an employee who has been terminated is allowed to return to work under an austere and clearly delineated set of conditions, one of which is that he/she can be fired again, instantly, without recourse to the union grievance procedure.  Typically, the reason for the termination is chronic absenteeism, and, just as typically, the cause of that absenteeism is traceable to substance abuse.

It’s hard to say when the first LCAs were signed, but they became a factor during the early 1980s, not long after alcoholism and drug addiction began to be recognized as diseases rather than character defects.

Take the example of an alcoholic woman who is chronically absent and who, after being warned, written up, and suspended, is ultimately fired.  Because the absenteeism is substance-related, the union files a grievance and sends the case to arbitration, the last step in the grievance procedure.

During the two or three month period between the employee being fired and her case reaching arbitration, she successfully completes a rehab program.  The union dutifully brings this woman’s rehab results to the company’s attention and more or less begs them to allow her back to work. 

Because she’s a good employee (when she shows up) the company agrees to reinstate her; but they refuse to bring her back without some rigorous guarantees.  A typical example of an attendance-related LCA is one in which the employee agrees not to miss even one day of work for six months, and understands that if she does, she’s subject to immediate termination, without any appeal rights.  One sick day and she’s finished.

While this sounds unrealistically demanding, from the company’s point of view it’s merely practical.  The woman has already  been terminated.  The paperwork has cleared the front office, her locker has been cleaned out, she’s officially off the payroll.  Bringing her back with her appeal rights intact and allowing her to start the grievance procedure all over again would be stupid. 

Besides, the union’s win rate in arbitration is about 15% at best, so if she wants to take her chances in a hearing, let her do so.  But if she is, in fact, clean and sober and wishes to come back to work, she’s more than welcome . . . so long as she’s willing to accept the conditions.

Until management began abusing it, the LCA worked fairly well, even as strict as the conditions were.  Many employees successfully conquered their substance addictions and were able to return to their old jobs via an LCA.  From the standpoint of drug or alcohol-ravaged lives being reconstituted, the story had its share of happy endings.

But then management debased the LCA by expanding its intent.  They began using the LCA as leverage.  They began using it  prior to a termination.  For example, during a meeting in which an employee is told he’s going to be terminated for general work performance, he’s given the “choice” of being fired on the spot, or signing an LCA in which he not only agrees to improve drastically but to relinquish his appeal rights. 

A work performance LCA might include the following provisions: if the employee is caught taking too long on coffee break even one time, he’s fired; if he violates even one safety rule, he’s fired; if his shirt tail is untucked, he’s fired; if his paperwork is filled out improperly even one time, he’s fired.  In other words, one screw-up, no matter how minor, and he’s history.

The employee faces a dilemma.  Maybe the company is just bluffing about firing him, trying to scare him into signing.  Should he refuse to sign the agreement?  Should he defiantly call their bluff and dare the company to fire him?  And if they do fire him, what are his chances of winning his job back in an arbitration hearing?  Or should he respond to the threat of being fired by agreeing to an unrealistic and draconian set of conditions, almost guaranteed to “trap” him?

There have been cases where marginal, but fairly decent employees have been summarily fired after being unable to live up to the demanding conditions of these LCAs.  And there have been lawsuits filed against the union by employees who were urged by their union rep not to sign, who were subsequently fired, and then lost their arbitration cases.

Once again, what started out as an exception—an anomaly, an “emergency” course of action—was co-opted by management and turned into an standardized weapon.  The lesson here is that, despite all that talk about “teamwork,” unions can’t be too cautious in their dealings with management.  As the man said, it’s a jungle out there.

DAVID MACARAY, a playwright and writer in Los Angeles, was a former labor union rep.  He can be reached at Dmacaray@earthlink.net    

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