6th Cir. Adopts Single-Employee Rule on Prehire Pacts

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By Lawrence E. Dubé

April 21 — A construction contractor that no longer employed any workers under a prehire contract with a labor union was free to repudiate the agreement, the U.S. Court of Appeals for the Sixth Circuit held in a case of first impression for the court.

Finding Baker Concrete Construction Inc. had not employed any workers for years under a contract with an Iron Workers local, Judge Alice M. Batchelder said April 21 the Sixth Circuit would adopt the “single-employee-unit rule” that has been followed in two other circuits.

The appeals court did not explain exactly how long an employer would have to go without unit employees before lawfully repudiating a prehire agreement, but it found the Ohio-based contractor's long gap in hiring clearly exceeded the “short-term” duration of labor relationships the agreements were intended to create.

Prehire agreements under Section 8(f) of the National Labor Relations Act are “tentative and anticipatory,” the court said, and they “should be voidable where there is no one with whom and nothing about which to bargain.”

Contractor Claimed Duty Ended

In 2000, Baker became a signatory to a multiemployer agreement between an employer association and Local 372 of the International Association of Bridge, Structural and Ornamental Iron Workers.

The Reinforced Concrete Contractors Association and Local 372 negotiated several successive collective bargaining agreements, including a contract that was effective from January 2012 through May 2015.

In January 2013, Baker informed the union that it had no employees performing work covered by the agreement and that the company had “no ongoing contractual obligations under the Agreement.”

The company wrote that “[t]o the extent that any formal notice of termination is necessary, this letter is Baker's notice,” but Local 372 argued the company couldn't withdraw from the multiemployer agreement more than 60 days before its May 2015 expiration date.

Acting on a grievance by the union, an arbitrator found Baker was in violation of the CBA, but the concrete contractor filed an action for a declaratory judgment in the U.S. District Court for the Southern District of Ohio.

The federal district court vacated the arbitration award and found Baker had no duty to observe Local 372's contract or continue bargaining with the union.

Sixth Circuit Cites NLRB One-Employee Rule

On appeal, Batchelder said the Sixth Circuit had never determined whether an employer could repudiate its obligations under a prehire contract when it had no employees in the relevant bargaining unit.

There was no dispute that the agreement between Baker and the union was governed by Section 8(f) of the NLRA, 29 U.S.C. § 158(f).

The provision allows employers in the construction industry to enter prehire agreements with unions, in contrast to non-construction employers that may not recognize a union until it has been elected or designated to represent a unit of employees.

“Section 8(f) agreements are intended to cover foreseeable groups of employes for short-term or interim construction projects where they would otherwise be unrepresented,” the Sixth Circuit said.

The court said it was clear that Baker had not employed anyone in the Local 372 bargaining unit for several years before it repudiated the contract, and “[t]he case hinges on the applicability and scope of the one-employee-unit rule.”

Batchelder traced the rule to the National Labor Relations Board's holding in Stack Electric Inc., 290 N.L.R.B. 575, 129 LRRM 1293 (1988), that an employer having one employee, or no employees, may lawfully withdraw recognition from a union.

Follows Seventh and Ninth Circuits

Batchelder said only two circuit courts had applied the one-employee rule in cases like Baker's, but they both agreed that an employer with fewer than two employees may repudiate a Section 8(f) agreement (Laborers Health & Welfare Trust Fund v. Westlake Development, 53 F.3d 979, 149 LRRM 2138 (9th Cir. 1995);J. W. Peters, Inc. v. Bridge, Structural & Reinforcing Iron Workers Local 1, 398 F.3d 967, 176 LRRM 3153 (7th Cir. 2005)).

“[A]s our sister circuits held in Westlake and Peters,” the Sixth Circuit wrote, “we hold that Baker had the right to repudiate the CBA, and with such repudiation, all of Baker's statutory and contractual obligations under the CBA were terminated.”

Judges Danny J. Boggs and Paul C. Huck joined in the opinion.

David O'Brien Suetholz of Kircher, Suetholz & Grayson, PSC, in Louisville, Ky., argued for Iron Workers' Local Union 372. Michael J. Underwood of Porter Wright Morris & Arthur LLP in Columbus, Ohio, argued for Baker Concrete Construction Inc.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com