Rocket Motor Corporation (RMC) entered into aproject labor agreement with 17 loc

Question

Rocket Motor Corporation (RMC) entered into aproject labor agreement with 17 local building trades ’ unions concerning a building remodeling project atone of the company ’ s manufacturing plants. As partof the project labor agreement, the unions agreed notto engage in any strikes, slowdowns, or other work stoppages and not to honor the picket lines estab-lished by any other labor organization at the job site.RMC agreed as part of the project labor agreement tohire contractors and subcontractors who wouldemploy individuals to perform construction work from each specified type of trade, represented by the17 unions with terms and conditions of employmentequal to the terms specified in any applicable unioncontract covering the type of work to be performed.The project labor agreement called for final and binding arbitration to resolve any disputes arising from theinterpretation or application of the terms of the proj-ect labor agreement.Bolton Engineering (BE) was one contractorhired by Rocket Motor Corporation to help remodelthe company’s paint facilities at the work site. As partof the contract entered into between RMC and BE, apledge to adhere to the project labor agreement previ-ously signed by RMC and the 17 unions was included.BE employed only a few supervisory employees of itsown at the work site and relied upon unionized sub-contractors to complete most of the assigned job sitetasks. However, a significant portion of the metal fab-rication work was subcontracted to two nonunionsubcontractors whose employees performed the work off-site. All of the metal fabricated parts built off-sitewere eventually to be installed on the job site by unionlabor.Local 82 of the Steel Fabricators Union (SFU)learned that BE was using nonunion labor at off-sitefacilities to perform metal fabrication work that could have been performed onsite by union member represented by the SFU. The prevailing wage for steel fabricator under current area labor agreements cover-ing SFU members was $20.73 per hour, whereas theoff-site nonunion workers were paid $9.00 per hour toperform the steel fabrication work. Local 82 leadersbelieved that BE was in violation of the project laboragreement by subcontracting steel fabrication work tononunion subcontractors who were paying theiremployees substantially less than the prevailing wagerate called for under Local 82 ’ s current contract. Fail-ing to resolve the issue voluntarily with BE, Local 82,SFU filed a grievance, which eventually went to finaland binding arbitration. The union sought damagesfrom BE in the amount of $1.6 million, the amountof the difference between the wages paid nonunionemployees who performed the steel fabrication work fabricator under current area labor agreements cover-ing SFU members was $20.73 per hour, whereas theoff-site nonunion workers were paid $9.00 per hour toperform the steel fabrication work. Local 82 leadersbelieved that BE was in violation of the project laboragreement by subcontracting steel fabrication work tononunion subcontractors who were paying theiremployees substantially less than the prevailing wagerate called for under Local 82 ’ s current contract. Fail-ing to resolve the issue voluntarily with BE, Local 82,SFU filed a grievance, which eventually went to finaland binding arbitration. The union sought damagesfrom BE in the amount of $1.6 million, the amountof the difference between the wages paid nonunionemployees who performed the steel fabrication work offsite and what Local 82 members would havereceived had the work been performed by them on the work cite.

Is BE bound by the terms of the project laboragreement, which it did not directly sign, including the duty to submit this labor dispute to final andbinding arbitration for resolution?

Was the project labor agreement meant to apply only to work performed on the job site as BE con-tends, or could the terms of the project laboragreement also be applied to off-site work as theUnion contends?

Explanation / Answer

In the present case a company RMC has hired another company BE in order to carry out the work on behalf of company RMC. There was already a contract subsisting between RMC and the labor unions.

The company BE employed some non-unionized workers in order to manufacture some parts that were required in order to carry out the work. The amount paid to the non-union labors was less as compared to the unionized labors.

The union filed a charge against the company RMC alleging that the company has violated the contract by hiring non-unionized employees.

As per Labor Management Relations Act (LMRA) it is unlawful for the unions to stop the employer from working and to assign the work to a particular union.

In the present case the company RMC has signed an agreement with the unions so that the unions would not strike and would not slow down the process of work at the company. There was no agreement between the company BE and union that the company would be employing only the workers who belonged to that particular union.

Thus, the company BE would not have to abide by the agreement which it did not signed directly, not because it was not signed directly but because the agreement does not allow the union to make the company to employ only unionized workers. The union cannot compel the company to employ union workers as per the provisions of Labor Management Relations Act (LMRA).

The project labor agreement would be applicable only at the manufacturing plant as given in the case study and it would not be applicable to the off-site works as contended by the union.

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