Collective Bargaining: What is a Good-Faith Impasse?

Anyone who wonders how long union contract negotiations can last when the National Labor Relations Board and courts get involved only has to look at the Mikesell's Potato Chip Co. versus General Truck Drivers, Warehousemen, Helpers, Sales and Service v, and Casino Employees, Teamsters Local Union No. 957, Case 09-CA-094143. Ironically, the employer tried to rush the collective bargaining process by declaring an impasse and instead ended up in court for years, battling unfavorable decisions and undoubtedly spending tens of thousands to defend its actions.

Rush to Judgement

The Mikesell's case began in 2012 and is still ongoing in 2019, with oral arguments for an appeal scheduled for February 2019. Mikesell's Potato Chip Company was negotiating a new labor agreement with the Teamsters Local 957 for warehouse workers, and route and over-the-road drivers. Negotiations began in September 2012 for the warehouse employees' contract expiring October 26, 2012 and the drivers' contract expiring November 17, 2012. There were three major issues to negotiate - healthcare, pensions, and commissions for route sales drivers. The Teamsters were the exclusive collective-bargaining representative for the employees.

Mikesell's had lost $5.5 million in the prior four years. The company was still experiencing financial difficulty when union contract negotiations began. The employer's goal during negotiations was to reduce operating expenses, while the union believed its members had already conceded too much over the past years to help the company survive and wanted lost wages and benefits restored.

Following is a brief summary of the critical 2012 dates leading to NLRB involvement:

• The two sides still couldn't come to an agreement in collective bargaining on any proposals after numerous meetings held up to November 14, close to the contract expiration date. The employer tried to set up a meeting with the union before the contract expired, but schedules conflicted. The employer told the union it wouldn't extend the current contract past the expiration date. The unions said they would be in touch to propose the next meeting dates its representative would be available.
• Two days later, on November 16, the employer notified the union that its most recent contract proposals made to date would become the full and final contract offer. This, in effect, gave notice to the union the employer believed there was an impasse. The union disagreed and wanted to meet again.
• On November 18, the employer declared an impasse.
• On November 19, the employer implemented its contract proposals. The employer and union did resume collective bargaining on December 5, 2012 for route sales drivers but still could not come to an agreement for over-the-road drivers.

Naturally, the union went to the NLRB, saying Mikesell's was not utilizing collective bargaining in good faith. In 2013, an Administrative Law Judge issued a ruling supporting the NLRB's decision that said Mikesell's Potato Chip Co. had violated NLRA Section 8(a)(5) (refusal to bargain in good faith with a union representative) and (1)(interfering with employee rights) by deciding to implement the content of the last collective bargaining agreement offered to the union without first bargaining to a good-faith impasse.

When Negotiating Seems Futile

What is collective bargaining to a good-faith impasse? The NLRB defines a bargaining impasse as the point in time of negotiations when the parties can honestly say that further bargaining would be futile because both parties believe there will never be an agreement. The NLRB and courts will consider the following factors to determine whether a real impasse exists:

• Collective Bargaining history
• Good faith of the negotiating parties
• Length of the negotiations
• Importance of the issues where there is disagreement
• Understanding of the parties as to the state of the negotiations

Since the employer declared the impasse, it was up to the employer to prove it.

The Judge decided there was not an impasse, and the NLRB agreed with the decision. A lot of factors drove the decision. One was the fact the union and employer had worked out tentative agreements for some employee groups, proving the two sides could come to an agreement.

The Judge also considered this fact: On November 14 there was not an agreement yet for over-the-road drivers, BUT significant progress had been made with both sides making concessions. Also, the union had agreed to meet after the contract expired, meaning the union was ready to negotiate more. The Judge also noted the union had counteroffered some of the employer's proposals, indicating the possibility of compromise still existed.

Bad Idea: Collective Bargaining and Hurrying to Declare an Impasse

The Judge came to the conclusion the employer suddenly declared an impasse and wanted to implement its proposals simply because the company didn't want to continue operating under the expired contract's conditions. You cannot declare an impasse just because you want to implement expense cuts as soon as a contract expires. You also can't declare an impasse because the union won't capitulate immediately. Mikesell's Potato Chip Company was found guilty of unfair labor practices.

The case continued for years as the employer filed exceptions and appeals to decisions that went against Mikesell's. After losing the final appeal, a battle over back-pay began, taking the employer and union back to court. Then on March 7, 2018, a federal judge ordered Mikesell's Potato Chip Co to pay almost $240,000 in back pay to union warehouse workers and drivers. This case is still ongoing.

A labor judge will always look at the totality of circumstances when deciding labor disputes. It's a series of events and actions over time that considered, and the history of the collective bargaining relationship of the union and employer. In this case, the judge didn't just consider the fact there was no agreement in place before the contract expired. He considered how cooperative the union and employer had been during the negotiation process, whether there had been any agreement in some areas, the bargaining schedule plans on either party's side up until the time an impasse was declared, and just the general reasonableness of the union and employer behaviors.

RELATED: How to Build Your Union-Proof Culture From Day One

Let's Talk! Really…Let's Talk!

Declaring an impasse is not something to be taken lightly. For Mikesell's Potato Chip Company, declaring an impasse was costly in more ways than one. The cost of unionization is well documented, and NLRB cases like this only increase expenses in the form of attorney fees, court fees, lost employee productivity, management time spent dealing with employee issues, and in this case, significant back pay.

Employee engagement is damaged too because the employer looks like it only cares about money and not employee welfare. While an impasse is not avoidable in certain situations, it's a costly route to be avoided. A better path is to strengthen employee engagement and hope that quality leadership and improved communication leads to union decertification. In the meantime, negotiate with unions in good faith.