Posts Tagged ‘Letters of Assent’

In IBEW Local Union No. 102 v. Quality Electric & Data, Inc. the Third Circuit (a federal appellate court) recently held that a union became the exclusive bargaining representative for all of the electrical contractor’s employees by virtue of the electrical contractor entering into an 8(f) pre-hire agreement with the union, even though the electrical contractor’s employees did not authorize the union as their 9(a) representative.  Accordingly the employer was required to make pension contributions for all of its employees, not just for its employees who were union members or who worked on union jobsites.

In so ruling, the court explained that an 8(f) pre-hire agreement, which is unique to the construction industry, binds an employer to a collective bargaining agreement in relatively the same manner as a 9(a) agreement whereby employees authorize a union to be their representative.  Hoping that other construction contractors can learn from the electrical contractor’s mistakes, I have included a brief overview of the case below.

Several years ago, a union representative met with the electrical contractor and insisted that the electrical contractor use union labor on one of its jobsites.  The electrical contractor agreed and signed up with the union.  The union presented the electrical contractor with several documents known as “Letters of Assent.”  By signing the letters, the electrical contractor agreed to be bound by the union’s Collective Bargaining Agreement (“CBA”).  Accordingly, the Letters of Assent constituted 8(f) pre-hire agreements under the applicable statute.

The union’s CBA required employers to contribute to workers’ pension benefits by making contributions into a fund designated by the union.  The electrical contractor claims that the union representative told him that the Letters of Assent only bound the electrical contractor to the CBA for its union employees and employees who worked on union jobsites.  Thus, the electrical contractor claimed that it was under the impression that it did not have to make contributions to the fund for its employees who were non-union members or who worked on non-union projects.

Thereafter, the electrical contractor sporadically used union labor and worked on union projects.  When it did, the electrical contractor made contributions to the fund as required by the CBA.  During this time, the electrical contractor also employed non-union workers who did not work on union jobsites.  The electrical contractor made no contributions to the union’s fund for these employees.

As the result of a compliance audit of the union’s fund, the union discovered that the electrical contractor owed $201,424.40 for delinquent pension contributions to the fund.  The delinquency was accounted for by the fact that the electrical contractor was not making contributions for its non-union workers who did not work on union jobsites.  The union took the position that per the CBA the electrical contractor was supposed to make contributions for such individuals.  The electrical contractor took the position that because the union never became the exclusive bargaining representative of all its employees, via the employees authorizing the union to serve as their 9(a) representative, the electrical contractor was not required to contribute to the fund for all of its employees.

Although the court found that the electrical contractor was correct in asserting that an 8(f) agreement could not convert into a 9(a) agreement, absent a majority election, it noted that an 8(f) pre-hire agreement binds and employer to a collective bargaining agreement in relatively the same manner as a 9(a) agreement.  According to the court, the only true difference between an 8(f) agreement and a 9(a) agreement is that a 9(a) agreement requires an employer to bargain with the union after the agreement expires, whereas when an 8(f) agreement expires, the employer can walk away.

Because the CBA clearly required the electrical contractor to make pension contributions for all of its employees working within the union’s jurisdiction, the court held that it must interpret and enforce the unambiguous terms of the agreement.  Specifically, the CBA required the employer to contribute funds for “each employee under the jurisdiction of the agreement.”  Accordingly, the electrical contractor could not escape the CBA’s plain meaning that it was required to make pension contributions to funds for all its employees performing work within the union’s trade and territory.

Lesson for Contractors:  When entering into Collective Bargaining Agreements read the terms carefully and do not rely upon any verbal assurances that conflict with the terms of the CBA.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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