On Petition for Review from National Labor Relations Board, Board Nos. 6-CA-16819 and 6-CA-16819(1).
Higginbotham, Scirica and Garth, Circuit Judges.
On this appeal, the Union (Local 3, International Association of Bridge, Structural and Ornamental Ironworkers) and the Company (John Deklewa & Sons) seek review of an order entered by the National Labor Relations Board ("Board") on February 20, 1987.*fn1 That order, which overturned an earlier rule (the R.J. Smith rule)*fn2 promulgated by the Board, held that: (1) pre-hire agreements sanctioned under § 8(f) of the National Labor Relations Act ("the Act"), 29 U.S.C. § 158(f), are not voidable at will; (2) that the employer, John Deklewa & Sons ("Deklewa" or "the Company"), committed an unfair labor practice in violation of § 8(a)(5) of the Act, 29 U.S.C. 158(a)(5), when it repudiated its pre-hire agreement with the International Association of Bridge, Structural and Ornamental Iron Workers, Local 3, AFL-CIO ("the Union"); (3) that Deklewa's obligation to bargain with the Union, because it was based on the pre-hire agreement, expired with that agreement; and (4) that these holdings should be applied retroactively. The Board has cross-petitioned for enforcement of its February 20, 1987 order.
Both the Union and the Company in petitioning for review of the Board's order challenge different features of the Board's ruling. Deklewa contends that the Board erred in finding that pre-hire agreements were not unilaterally voidable. The Union, while agreeing with the Board that pre-hire agreements should not be unilaterally voidable, claims the Board erred in holding that an employer's duty to bargain with the Union terminates upon the expiration date of the pre-hire agreement.
Deklewa is engaged in the construction business. In June 1960, although not a member of the Ironworker Employers Association of Western Pennsylvania (the "Association"), Deklewa agreed to be bound by the agreement between the Association and the Ironworkers Union. Deklewa adhered to each successive agreement between the Association and the Union, for a twenty year period between June 24, 1960 and October 1, 1980. In October 1980, Deklewa joined the Association as a member. The pre-hire agreement in dispute covered the years 1982 to 1985.
Deklewa has engaged in a number of projects which required ironworkers. When it performed the work itself, Deklewa hired ironworkers through the union hiring hall. When Deklewa engaged subcontractors, it subcontracted only to companies bound by the same union agreement. In September 1983, during the term of the 1982-1985 agreemen,t Deklewa resigned from the Association and notified the Union that it was repudiating the agreement. Deklewa then subcontracted iron work to an employer who was not a party to the Union agreement. On October 14, 1983, the Union filed the instant unfair labor practice charge.
The Board agreed to hear the case based on a stipulated set of facts. As we have noted, the Board, in a ruling which reversed its prior construction of the Act, held that Deklewa had violated § 8(a)(5) of the Act by unilaterally repudiating the 1982-1985 agreement, but further held that after the agreement had expired in 1985, Deklewa was not obligated to bargain with the Union. The Board also held that its decision would apply to Deklewa's case and to all cases then pending as well as all cases in the future.
The Board based its decision on a detailed examination of the legislative history of the Act and in particular § 8(f). In order to understand the Board's order and to provide the context in which to analyze its decision, we too, turn to the legislative history of § 8(f).
Section 9(a) of the Act, 29 U.S.C. § 159(a) provides that "a representative . . . designated or selected for the purposes of collective bargaining by the majority of the employees in a unit . . . shall be the exclusive representative of all the employees in such unit for the purposes of collective bargaining. . . ." Section 8(a)(5) of the Act imposes upon an employer whose employees "designate or select" an exclusive representative, the "duty to bargain collectively with the representative of his employees." 29 U.S.C. § 158(a)(5). The Act does not provide for the method by which the employees choose their representative. However, employees may compel recognition of their designated union representative as their exclusive bargaining agent by prevailing in an election and by certification of the union by the NLRB. 29 U.S.C. § 159(b),(c).
The majority status of a union as the exclusive representative of the employees, once established, is irrebuttably presumed for a reasonable period of time.*fn3 Upon the expiration of a collective bargaining agreement, the employer may not withdraw recognition of the union unilaterally unless it has reasonable, good faith grounds for believing that the union has lost its majority status. NLRB v. Gissel Packing Co., 395 U.S. 575, 597, 23 L. Ed. 2d 547, 89 S. Ct. 1918 n.11 (1969); NLRB v. Leatherwood Drilling Co., 513 F.2d 270 (5th Cir.), cert. denied, 423 U.S. 1016, 96 S. Ct. 449, 46 L. Ed. 2d 387 (1975); NLRB v. Frick and Co., 423 F.2d 1327, 1331 (3d Cir. 1970).
As is apparent from the statute and the case law construing it, the Act assumes that a stable group of employees who are capable of designating a union representative or participating in a certification election are employed by management in a continuing work relationship.*fn4 This assumption works well for employer-employee relations in manufacturing and in many other fields of endeavor; it does not work well in the construction field. In the construction industry, work typically varies by the season and the size of the project. Workers do not usually remain at a single job site long enough to designate a union representative. Moreover, because of the mobility of the construction industry workforce, elections and Board certification many times prove impracticable.
As a consequence, this situation presented problems for both management and its employees. The employers sought accurate estimates of their labor costs when they bid on projects.*fn5 Having a guaranteed union contract was virtually a sine qua non toward meeting this goal. On the other hand, employees in the construction industry desired all the benefits of union representation that were available to workers in other fields.*fn6 In an attempt to satisfy both of these interests, a pre-hire agreement practice developed in the construction industry. A pre-hire agreement is a contract agreed to by an employer and a union before the workers to be covered by the contract have been hired. Robert's Dictionary of Industrial Relations, Third Edition 562 (1986). See also 29 U.S.C. 158(f).
With respect to industries other than the construction industry, the Board had determined that pre-hire agreements were illegal because they designated an exclusive union representative of the employees before an election had been held and before the union's majority status had been tested. Thus, when the Board assumed jurisdiction over the construction industry,*fn7 it was required to address the day to day practices of an industry whose operations violated the Act as interpreted and administered by the Board. Accordingly, the Board applied the general prohibition against pre-hire agreements to the construction industry and suggested that the industry petition Congress for an exception. See generally NLRB v. Irvin, 475 F.2d 1265, 1267 (3d Cir. 1973) Daniel Hamm Drayage Co., Inc., 84 NLRB 458, 460 (1949) enf'd 185 F.2d 1020 (5th Cir. 1951).
Thus began an eight year effort which culminated in a number of amendments, including the addition of § 8(f), to the NLRA in 1959. It provides:
It shall not be an unfair labor practice . . . for an employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who, upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction industry employees are members . . . because (1) the majority status of such labor organizations has not been established under the provisions of section 9 of the Act prior to the making of such agreement . . . Provided . . . That any [such] agreement shall not be a bar to a petition [for a representation election] filed pursuant to section 9(c). . . .
Other subsections of § 8(f) which we have not quoted, allow construction industry pre-hire agreements to contain union security clauses; exclusive hiring hall provisions; and job referral requirements. At the same time as § 8(1) was enacted, Congress also added § 8(b)(7)(C) which, inter alia prevents a union from picketing in order to force an employer to sign a prehire agreement.
Some of the effects of these statutory changes are clear -- employers and unions in the construction industry are permitted to enter into pre-hire agreements which designate the union as the exclusive representative of a company's employees without a formal election, and the employees, now union members, may at any time vote to decertify the union as their exclusive representative utilizing the formal Board procedures. Two issues, however, were not resolved by § 8(f): (1) whether during its term a § 8(f) agreement is as binding and enforceable as any other union agreement, and (2) whether a § 8(f) agreement requires an employer to bargain with the union as the employees' "exclusive representative" after the pre-hire agreement has expired.
In the typical employer-union context, the employer is bound to bargain with the exclusive representative even after the contract has expired. In such a case, recognition of the union can only be withdrawn if the employer has a reasonable, good faith belief that the union does not represent a majority of the employees. NLRB v. Gissel Packing Co., 395 U.S. 575, 597, 23 L. Ed. 2d 547, 89 S. Ct. 1918 n. 11 (1969); NLRB v. Leatherwood Drilling Co., 513 F.2d 270 (5th Cir.), cert. denied, 423 U.S. 1016, 96 S. Ct. 449, 46 L. Ed. 2d 387 (1975); NLRB v. Frick and Co., 423 F.2d 1327, 1331 (3d Cir. 1970). After the expiration of a collective bargaining agreement both parties, the employer and the union, are not free from the strictures of the agreement until an "impasse" in negotiations is reached. See generally, N.L.R.B. v. Katz, 369 U.S. 736, 8 L. Ed. 2d 230, 82 S. Ct. 1107 (1962); Taft Broadcasting Co. v. AFTRA, 163 NLRB 475 (1967). The employer is then free to impose terms on the employees, and the employees in turn, may then picket, strike or exert other forms of pressure.
In R.J. Smith Construction Co., 191 NLRB 693 (1971), enf. denied sub nom. Local No. 150, International Union of Operating Engineers v. NLRB, 156 U.S. App. D.C. 294, 480 F.2d 1186 (D.C. Cir. 1973), and Ruttmann Construction Co., 191 NLRB 701 (1971), the Board interpreted § 8(f) to mean that a "pre-hire agreement is merely a preliminary step that contemplates further action for the development of a full bargaining relationship." Ruttmann, 191 NLRB ...