What is a Collective Bargaining Agreement – and Why is it Important?

The What Series

 

 

Have you ever heard someone say or mention a “Collective Bargaining Agreement (CBA)” in conversation, and you thought to yourself, “I’ve heard people mention it, but what exactly is it?”

“If only I had somewhere to go to help understand things!”

It could be that you’ve never heard of it before, but you are curious now.

The Wealthy Ironworker, as part of “The What Series,” presents the article,

 

“What is a Collective Bargaining Agreement?”

 

***NOTE: For the purposes of this post, we limit the Collective Bargaining Agreement (CBA) to the Building Trade Unions – Ironworkers, Pipefitters, Electricians, etc. The basic premise for ALL Collective Bargaining Agreements is the same – BUT, as far as those in the construction field, they have what’s called Multi-Employer Collective Bargaining Agreements, and they are the focus of this particular article.***

 

What is a Collective Bargaining Agreement (CBA)?

 

 

The AFL-CIO – which most of America’s unions are affiliated – defines Collective Bargaining this way:

 

“Collective bargaining is the process in which working people, through their unions, negotiate contracts with their employers to determine their terms of employment, including pay, benefits, hours, leave, job health and safety policies, ways to balance work and family, and more.”

 

Nothing mystical about that, is there? People who have representation collectively negotiate for better pay, benefits, etc.

Collective Bargaining Agreements (often referred to the shortened form CBA), then, are – quite literally – the contracts that result from people coming together to bargain as one voice.

 

United we stand, divided we fall – is the operating principle, here.

 

Common Collective Bargaining Agreement (CBA) Items

 

What can you find in a Collective Bargaining Agreement (CBA)?

 

Since Collective Bargaining Agreements (CBA) are contracts, a good way to help define them is to highlight and discuss some of the things you’re likely to see in them. Below, then, are several of the main things commonly found in many Collective Bargaining Agreements (CBA).

 

Pay

For obvious reasons, pay is listed first. Collective Bargaining Agreements (CBAs) will specifically spell out what the pay is for each person covered under it – including apprentices.  Typically, the amount of money spelled out for each journeyman or woman is called ‘scale,” and apprentices usually make a percentage of “scale” throughout their apprenticeship.

CBAs can – and sometimes do – spell out what foremen, general foremen, and others (think superintendents, etc.) above make, while others allow some flexibility so those positions are free to negotiate.

Moreover, most Collective Bargaining Agreements (CBAs) are multi-year, with many covering 3 to 5-year periods. The CBA will specifically spell out how much money has been negotiated for each of those years.

The Collective Bargaining Agreement (CBA), then, takes the guesswork out of pay, specifically spelling out the exact amount of money the employer will pay the employee who is covered by it.

 

Benefits

Benefits – most notably retirement and health care – have become more than just supplemental to your wage. They have become absolutely critical. What’s more, they will continue to do so as the tight labor market forces employers into greater competition for employees. And not just within their own industry, but also from others, too. Remember, the internet and the massive economy that’s resulted from it? Just 25 years ago we were accessing it via dial-up.

For those of you too young to remember, houses had landline phones (plugged into the wall), and everyone accessed the internet through the telephone line – hence the term “dial-up.”

 

 

Benefits, then, will increase significantly as companies and, indeed, entire industries (which I have coined the construction industry as a “legacy” industry), will have to be more competitive.

The two listed earlier, retirement and health care, are the two we will specifically focus on, here.

Retirement

Individuals under a Collective Bargaining Agreement (CBA) almost always have two different types of retirement: Defined Benefit and Defined Contribution. I won’t cover the difference here, but most union craftsmen and women have a defined benefit – also known as a pension, and a defined contribution – also known as an Annuity fund (think 401k).

I have never met someone who said they had too much money in retirement – but every single person I’ve ever talked to about it – and I mean every single one – has told me they wished they would have saved more, started saving earlier, and laments their choices – especially when they were young.

 

Health Care

According to this website, 100 million Americans have medical debt. This website mentions that 62% of personal bankruptcies result from medical debt.

Think health insurance isn’t important? Think again.

Commonly found on Collective Bargaining Agreements (CBAs) are health care contributions – that is, what has been negotiated and is contributed by the employer.

This is a great benefit that many people, especially young, believe they don’t need. This is unfortunate – and simply not true. American youth are sicker and have poorer diets, and 19 to 34-year-olds are the most likely group to NOT have health insurance. I will never forget when an ironworker told me that once he became a union member, he was able to afford health insurance for his family – which included his wife and young kids. Talking heads will tell you that you are young and only need catastrophic insurance. The government understands this is a significant problem, and it’s one of the reasons why the law was changed to allow young people to stay on their parent’s insurance plan until 26.

 

***NOTE***

Most important is that under a Multi-Employer Collective Bargaining Agreement (CBA), your retirement and health insurance ARE ON TOP OF YOUR WAGES – THEY DO NOT COME OUT OF YOUR PAY.

In other words, your retirement and health care contributions the employer pays, NOT YOU. If your CBA says you make $30.00 an hour, you make $30.00 an hour PLUS RETIREMENT AND PLUS HEALTH CARE.

 

I don’t know of any other industry that has this. Make no mistake: that is a tremendous set-up.

 

Hours and Conditions

Collective Bargaining Agreements (CBAs) will also spell out the hours and various conditions for you. Some examples, depending on your location and CBA, are hour ranges (think 7:00 to 3:30), anything over 8 is overtime, what days are holidays, Sundays are double-time, night shift difference in pay, when lunch and any breaks are, showup time (getting paid for showing up to the job but the employer sends everyone home), how often you are to get paid, how to deal with parking for jobs (a big deal in major metropolitan areas), and more.

The list of conditions can change significantly depending on the region, union density, and a list of other things.

 

How Multi-Employer Collective Bargaining Agreements (CBA) Are Different From Contracts

 

One of these is not like the other

 

Everyone is involved in some form of a contract: cell phone, home mortgage, power, car payment, credit card, etc. Since a Collective Bargaining Agreement (CBA) is, in its purest form, a contract, those who are covered under a Collective Bargaining Agreement (CBA) are in a contract.

There are, however, two main things that make a Collective Bargaining Agreement (CBA) in the Building Trades different from a normal contract you’re likely a part of.

 

Multiple People

Normally, the contracts you’re a part of are between you, the individual, and a company. Under a Collective Bargaining Agreement (CBA) in the Building Trades, however, the contract (agreement) is made with you AND other people – other union members.

Whether your local union has 300 members or 3,000, they are all covered – and are a part of the contract.

 

Multiple Companies

The second main difference is that while you are used to contracts with just one company, a Multi-Employer Collective Bargaining Agreement (CBA) has numerous companies who are a part of the contract. It could be you have 10 companies/employers or 100 – it doesn’t matter; they are a part of the Collective Bargaining Agreement (CBA).

 

Collective Bargaining Agreement (CBA) Vs. At-Will Employment

Some people will tell you that you don’t need to be represented by a Collective Bargaining Agreement (CBA); instead, telling you that you’re covered by the law – commonly referred to as “At-Will” Employment. There are several problems with this.

 

What is “At-Will” Employment?

 

Can you bank on a handshake – or a promise?

 

“At-Will” employment is defined as:

“At-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences.”

All states except Montana are “At-will.”

Now, this may sound great – but consider what The National Conference of State Legislatures says about it:

 

“At-will also means that an employer can change the terms of the employment relationship with no notice and no consequences. For example, an employer can alter wages, terminate benefits, or reduce paid time off. In its unadulterated form, the U.S. at-will rule leaves employees vulnerable to arbitrary and sudden dismissal, a limited or on-call work schedule depending on the employer’s needs, and unannounced cuts in pay and benefits (emphasis mine).”

 

Do you know what combats this? Do you know what helps to protect workers from “At-will” employment that “leaves employees vulnerable?”

 

 

A COLLECTIVE BARGAINING AGREEMENT (CBA).

 

 

Employers and Contracts that Benefit Them

 

Increase Notice to Leave

 

 

Here’s an example – albeit in the UK – where the employer asked the person to agree to a 2 to 3-month notice.

Here is another article discussing how “At-will” employment makes the customary two weeks’ notice legally unenforceable – and then discusses employer contracts to do it, instead.

This law firm’s website blog discusses how, yes, employer contracts are legally binding when you sign them – including the increased amount of notice to leave.

 

Non-Compete Clauses

 

 

Legal Zoom had this to say about Non-compete Agreements:

“Noncompete agreements are contracts that companies use to reduce competition and prevent the spread of trade secrets. Like other contracts, a noncompete agreement is a binding document, and employees who sign them can’t enter into direct competition with their former employer after leaving their job.”

Non-compete clauses in employer contracts are being used more and more. If you, as a craftsman, cannot use your craft whether in the field, management (foreman, general foreman, superintendent), project manager, salesman, safety manager – all positions craftsmen occupy, I might add – what recourse do you have?

A Collective Bargaining Agreement (CBA), that’s what.

On April 23, 2024, the Federal Trade Commission put a ban on non-compete agreements. According to this CBS article, “The antitrust and consumer protection agency heard from thousands of people who said they had been harmed by noncompetes, illustrating how the agreements are “robbing people of their economic liberty,” FTC Chair Lina Khan said.”

Someone will certainly sue, and should the ban NOT hold up in court; I’d look for employers’ renewed attempts to get creative when it comes to trying to prevent talent from leaving via them. In any case, I left the portion up with a strikethrough so the reader could see it.

 

Breakup fee

 

 

While normally reserved to make one party pay another for costs incurred if someone “backs out” of a transaction (a company is buying another one, for example), it is, at least in one case, being applied to someone who said he’d take a job but then decided not to.

LinkedIn reported eariler about a case in the courts currently discussing this very thing.

Imagine that – changing your mind about a job and being taken to court over it. Currently, this practice is primarily in finance and tech. With the skilled trades shortage, however – and coupled with the increased use of headhunters (recruiters), which can cost an astounding 25% of someone’s first year’s pay – I suspect employers will seek to get creative in trying to keep employees from leaving.

 

The Importance of A Collective Bargaining Agreement (CBA)

 

 

By now, I hope you can understand the importance of the Collective Bargaining Agreement (CBA), why you should have one, and if you don’t, hopefully, your eyes have been opened to their importance.

Without one, your employer can do all of the things mentioned under the “At-will” section, and you, as the employee, have no recourse.

With a Collective Bargaining Agreement (CBA), however, various items like pay, benefits, working conditions, rights and responsibilities (for both parties), are spelled out, levelling the playing field and providing some stability between employer and employee. There are a lot of things you wouldn’t do without a contract: purchase a home, or vehicle, borrow/loan money – the same should apply to your employment, also.

Protect yourself with a Collective Bargaining Agreement (CBA).

 

Employers Don’t Just Have Responsibilities – They Have Rights, Too

 

Employees – union members – also have the responsibility to abide by the CBA

 

Last but not least, I want to end this article with this section for several reasons. The days of contractors and union members against each other need to die a thousand deaths. They need each other. Without the contractor, union members have no employment. Without union members, employers do not have top talent to take care of their projects. They are in this together.

To that end, the Collective Bargaining Agreement (CBA) doesn’t just spell out the responsibilities the employer has – it also highlights the responsibilities of employees, too.

If the CBA says your working hours are 7:00 to 3:30, then that’s what they are. If it says your break is 15 minutes, then take 15 minutes – and that’s it.

I could go on but I believe the point is made.

Moreover, I’m left to wonder, how many other contractors would be interested in sitting down at the table and entertain being a union contractor, if every one of us worked to the best of our ability for our signatory contractors? What would the industry look like if there were twice as many contractors working with union members under a Collective Bargaining Agreement (CBA)?  What if every union member were intentional about what they did, how they did it, and that convinced “on-the-fence” contractors to sit at the table and discuss how they could work together?

Together, everyone has a part to play and can make a difference.

Let’s work at it, shall we?