What is a Master Labor Agreement?
A Master Labor Agreement (MLA) is a binding, formal agreement between an employer and a labor union. These agreements are typically used when a large or multi-national company brings together a large workforce to sign a formal collective bargaining agreement. Most MLAs have indefinite terms of 5 or more years. They generally allow individual plant labor agreements to be modified by location and may have internal rules that apply only to individual locations. While the original MLA may not be amended once signed , individual plant labor agreements may be periodically updated. MLA agreements will generally have a dispute resolution process outlined that will be followed when issues arise in individual locations.
One of the main purposes of an MLA is to help grant and maintain stability and predictability between the employer and its labor union. Large organizations with increased collective bargaining obligations often use MLAs to help maintain relations between management and unions. The terms and conditions outlined in an MLA will usually continue to hold throughout the arrangement even when an individual plant agreement must change. Nevertheless, when disputes regarding the MLA arise, resolution can become difficult. Many MLA agreements contain a defined dispute resolution process that will be used to work through differences. The dispute process may include a mutually agreed upon arbitrator or mediator.
A Historical Overview of Master Labor Agreements
A pattern of economic development in the United States has been that labor unions have worked to achieve and maintain a "first among equals" relationship with respect to the hiring of workers at the project sites of particular large scale construction projects. A major portion of the impetus for this effort, throughout the history of organized labor in the United States, has been the desire to hold down the costs for labor while ensuring that job opportunities are not given solely on the basis of favoritism or a monopolistic market for a specific trade. In order to accomplish this goal it has generally been viewed as necessary to have the various trades organized into a single association. This practice maintained to varying degrees into the 1930s even though the National Labor Relations Act had by then outlawed the related "closed shop" type of union security agreement. By World War II, the tightening labor market led in many areas to the widespread adoption of an "area-wide" approach in the negotiation of "master" labor agreements.
In the years following World War II both labor and management came to recognize that the "area-wide" approach to the negotiation and administration of labor contracts was well suited to the general needs of both sides. A more efficient job site work force was thus obtained, greater uniformity of wage and work rules was established, and areas of potential conflict could be resolved by a general agreement which encompassed a broad geographic area. This more harmonious method for handling the resolution of bargaining disputes led to a growing popularity of master labor agreements which included all of the trades and crafts.
The earliest master labor agreements were those which existed in the major cities. In many cases the negotiating parties were persuaded by the example of the New York City Building and Construction Trades Council, which negotiated a single collective bargaining contract for all of the trades for use in that metropolitan area. This applied to the construction of many of the world’s largest buildings. Almost immediately California joined this trend, with a master labor agreement for the Bay Area. The Midwest soon followed, with master labor agreements for the construction of high rise buildings in the Detroit and greater Chicago metropolitan areas. Soon thereafter the practice began to reach out to some of the smaller metropolitan areas and an increasing number of specific sub-trade master agreements came into being. As cities like Los Angeles, Chicago and Detroit began a decade or more of aggressive expansion, the concepts of a master labor agreement began to be used to obtain a single collective bargaining agreement for the entire southern California region, along with an impressive array of large building projects in metropolitan Detroit and greater Chicago.
The time tested practice of negotiating and enforcing comprehensive master labor agreements would again prove its value during the construction of the Trans-Alaska Oil Pipeline in the mid to late 1970s. All of the trades and crafts in building sector of the construction industry shared a common goal during the late 1970s period of growth and expansion, as certain low labor cost foreign countries became a major factor in determining the level of wages and benefits for U.S. industry. The image of an expanded, flexible work force of skilled labor, available for multiple projects in any location, spread rapidly throughout all parts of the United States and Canada. However, early attempts to have most of the construction industry adopt to a master labor agreement system met with a strong resistance. In mid-1981 a series of events associated with the re-election of Ronald Regan to the presidency, would lead to a train wreck of national labor legislation. With that attempt now dead in the water, organized labor would turn to an alternative strategy which would lead to the creation of a series of multiple "area-wide" master labor agreements.
As referenced in the prior section, there is a wide range of jurisdictional disputes among the various unions in the building and construction industry. During the mid to late 1980s and into the early 1990s the courts would begin to aggressively address the issue of jurisdictional disputes. Consequently, the years after 1980 would see the offer of a master labor agreement with multi-craft jurisdiction as an increasing factor in resolving many hard fought labor disputes in the building and construction industry.
Master Labor Agreements: Core Components
The specific components of an MLA can differ from one agreement to another, but certain elements are commonly included. MLAs typically define the scope of work, employment conditions, pay rates, and other standard employment policies among signatory contractors and subcontractors. For example, the wage-rate provisions in an MLA usually clarify the base wage rates (often for journey level workers) for all personnel placed through the agreement, including those in supervisory and administrative positions. Wage rates may also adjust as various prevailing wage rates increase or as certain work classifications are phased in over time. The agreement may expressly prohibit employers from using the MLA to pay lower wages than required by a relevant collective bargaining agreement, which in some jurisdictions, is only enforceable if the signatory contractor also has a separate collective bargaining agreement with a recognized union.
MLAs also typically like other agreements address overtime requirements, which may vary by the class of worker after the first 8 hours of the workday or 40 hours per week. Other sections of the MLA may discuss other matters such as pay periods, transportation and travel pay, tools and equipment, no-strike clauses and provisions governing how disputes arising under the agreement are to be resolved. While most provisions of an MLA are mandatory subjects of bargaining, the concept of an appropriate bargaining unit for a multi-employer agreement has been the subject of historical debate.
Advantages to Consider with Master Labor Agreements
Master labor agreements can bring several advantages to employers, employees, and unions. For employers, the process can streamline negotiations. The use of a template also allows for certain provisions to govern the relationship between employees and the employer. Certain provisions could be efficiency issues that would be applicable across a workforce.
For employees, the agreements allow for uniform working conditions across the organization. This means employees in different locations in different roles can expect similar treatment. Not only does this promote equity, it can limit union/management strife by removing some of the inherent grievances.
Unions can benefit from these agreements as they can provide negotiating assistance and an opportunity to negotiate items simultaneously with multiple parties. Conducting negotiations in this way may allow unions to streamline their efforts and minimize redundancy.
Drawbacks and Critiques of Master Labor Agreements
Critics of master labor agreements argue that one of the principle shortcomings is inflexibility. They contend that by attempting to design a one-size-fits-all agreement, the parties may end up with language that is either too rigid or too loosely written, leaving too much room for future dispute. Flexible agreements, on the other hand, can take into account the specific needs of the parties, and particular contract provisions can be more finely tuned to suit particular project requirements. When the hope is for the parties to enter into a master labor agreement from which numerous individual labor agreements are to be drawn, it is critical that each individual contract be allowed to stand on its own: whether the provisions at issue are essentially the same in each agreement is irrelevant. Particularly in the construction context, it is all too often the case that different job sites, various crafts, and variations among contractors all necessitate the need for flexible language, capable of accommodating the specific circumstances that vary from contract to contract .
Another frequent criticism of master labor agreements is that it is difficult to balance the needs and interests of the various stakeholders into a single agreement. It is often difficult to find language that both sides believe is fair and reasonable, and that all stakeholders would be willing to accept as part of a broad based agreement. It is often this balancing act that leads many employers to enter into individual agreements, rather than a broader master labor agreement. Further, in the context of construction agreements, there is also the risk that the language agreed to at the master labor agreement level will badly skew the language of the individual construction contracts; if the parties attempt to fit one set of language to all situations, including those where the individual construction contract does not permit such language, it can lead to substantial unpredictability.
Master Labor Agreements v Project Labor Agreements
Master labor agreements and PLA are often incorrectly interchanged, but they are actually rather different. Massive unionized construction employers generally sign master labor agreements with their unionized employees which control how all work undertaken by any of the company’s union labor force is handled. These MAAs are typically long-dated (often for a decade or more) and are among the most complex and comprehensive CBAs negotiated. MAA’s encompass every conceivable aspect of contracting line work with union employees. At the same time, PLAs govern a single, particular, construction project, and its union labor force. This may be a $100 million water or waste water treatment facility, a large convention center, a high-rise residential condominium, or some other major construction project. Such PLAs are usually far less complicated pieces of work, although they can certainly be daunting, too. The concept of the PLA began in 1936 when President Franklin D. Roosevelt issued Executive Order No. 793 to "encourage the inclusion" of union work rules, job assignment procedures, dispute resolution machinery, wage and fringe benefit plans, etc. in the negotiation of federal public works construction contracts. A few decades later, President Harry Truman encouraged the "consideration" of such pre-negotiated work rules in non-governmental construction. The intervening years witnessed the growth of collective bargaining, and its work rules, among public and private sector contractors and unions, as well as the evolution of a new major employment type known as professional construction managers (PCM) who manage similar agreement among multiple "lump sum" contractors on the same construction site. This all laid the groundwork for the more recent adoption of the modern-day "project labor agreement" (PLA). MAAs and PLAs are not interchangeable, as the first are usually part of the overall labor and employment system of the unionized contractor as a whole. Meanwhile, the second are only "particularized" for one project. As a result, just as each project must compete for the organizational resources of the contractor, so, too, does each project union labor force. When two or more projects of a PLA-signing contractor overlap or are with the same trade unions, the same measures agreed to in the negotiated PLA apply across that contractor’s entire work-force. For example, a contractor that conducts work in multiple areas of the country, and on a number of projects simultaneously has during the last decade used the same electricians’ union for projects in Marshall, Texas; Huntsville, Alabama; Baton Rouge and New Orleans, Louisiana; and Galveston, Texas. These unions and projects would fall under the same negotiation and contract if there were a PLA in place with that builders’ electrical workers union. Thus, a PLA essentially has a multiplier effect. The above being said, the existence of a "master agreement" does not preclude the need for a project-specific collective bargaining agreement. Indeed, many contractors with an MAA also have PLAs. The majority of work done by the contractor is governed by the MAA, but a specific contractor/owner "project Labor Agreement" governs the remainder of the work. On the owner’s side, the MAA may be in effect between the contractor and its unionized workforce, but not for the agreement between owner and contractor. Another variation is the use of a PLA for the general contractor’s workforce, but a project-specific CBA for the work of the sub-entities (e.g., electrical) contractors working at the site. Thus, one size does not fit all.
Current Concepts in Master Labor Agreements
Recent trends indicate that master labor agreements are becoming the preferred agreement to set forth specific terms for all bargaining units at a large location, particularly where subcontractors are involved. Mergers and acquisitions of multi-jurisdictional employers with union-represented employees often present challenges when labor agreements can only be negotiated for specific locations, or with specific unions (e.g., management, clerical, production), rather than across multiple locations or divisions. These problems have been overcome in the past by negotiating master labor agreements, which can be tailored to cover multiple locations, jobs and employees, even when those entities are public and private entities with different statutory rights. From a labor law perspective, master labor agreements tend to be around two things: (1) the parties want a contract that covers a large number of union employees; and (2) the employer wants to limit the number of contract negotiations it has to do with a large number of unions.
The following are recent trends involving master labor agreements:
- (1) Broader scope of application. Some master labor agreements have been expanded to cover a wider variety of employees, either through the inclusion of new units under the master agreement (i.e . , "external" or "implicit" bargaining) without these employees expressly approving the master labor agreement, or through agreements that cover newly acquired entities without the need to negotiate separate terms with a new union, but include that entity as part of the terms of the existing master agreement.
- (2) Negotiated in a company-wide setting. Some master labor agreements have been negotiated in a company-wide setting to accomplish job security or job protection objectives without illegal unilateral change. For example, when a company divides a location into more seniority-based production units, most often in response to economic challenges, some unions have agreed to job security or job protection benefits in exchange for the company being able to reorganize work. In some of these situations, the union agrees to provide a certain number of positions to the affected employees as long as they accept an offer in another location.
- (3) Acceptance rather than ratification. Some master labor agreements will now use acceptance procedures, rather than ratification votes, which can streamline the process. Some of these agreements have included a model agreement that the union has agreed to, which is then used by individual plants or locations without the need to ratify every step of the process. The individual location can still refuse to opt-in, but it must do so before the deadline for opting in.