The Building Tradesman Newspaper

Friday, March 08, 2013

Construction may evade worst effects of right-to-work…

By Marty Mulcahy, Editor

LIVONIA – Michigan’s new right-to-work law certainly wasn’t enacted by majority of Republican lawmakers in December because it would do workers any favors. Still, by virtue of the nature of the construction industry, building trades unions are likely to be less harmed by the new RTW law than other unions.

That was just one of the takeaways from a “Right-to-Work Breakfast Symposium” held Feb. 21 at Schoolcraft College, sponsored by the Construction Association of Michigan (CAM) the Michigan Building and Construction Trades Council, and Management and Unions Serving Together (MUST). The event attracted about 225 guests from the construction community, including union reps, contractors, contractor associations and owners.

The event featured three speakers: Michigan Building and Construction Trades Secretary-Treasurer Patrick Devlin, labor attorney John Tesija and employer attorney Donald Scharg. Host Patrick Baker, director of labor relations at CAM, said the meeting was to address “the challenges and the impact of this law and how it will affect our livelihoods and our families.”

The Michigan right-to-work law, which takes effect March 28, allows “free riders” at a workplace to enjoy the benefits of their union’s collective bargaining, without having to pay dues. The impact of RTW on the construction industry was the focus of the symposium. And while right-to-work is a toxic law intended as a political divide-and-conquer strategy by the state’s Republicans to weaken unions, the construction industry has a few built-in advantages when it comes to deflecting the effects of the law.

“The talk around the country where right-to-work has been put in place is that it has resulted in very little drop off in union membership,” Devlin said. “People in the trades generally want to belong to a union. People in the trades understand what organized labor is all about. They understand the importance of training; they want to work with good people.”

Devlin said building trades leaders were very close to convincing state Republican lawmakers to exempt the building trades unions from the RTW law when it was adopted last December . “I think they realize we’re a unique industry,” he said. “Then the lawyers got involved.”

The GOP lawmakers, he said, “already made a “carve-out” to exempt police and firefighters from RTW, but the lawyers feared doing the same for the building trades might not have held up to “fair and equal” standards under the Constitution. So the “carve-out” exemption for the building trades didn’t fly.

Labor attorney Tesija said the RTW law introduces a whole subset of “unintended consequences” for both labor and contractors to consider. “There are some huge risk factors that weren’t considered when they initiated right to work,” Tesija said.

Chief among those risk factors is a term only a lawyer or accountant could love: “withdrawal liability.” The ramifications of the term, Tesija said, is that RTW “isn’t just an employee issue. It’s an employer issue, too.” What it means is that in organized construction, employers have a major stake in maintaining the collective bargaining status quo with their workforce, given their close legal ties to funding union benefit plans. If the right-to-work law weakens a bargaining unit so much that a contract is not renewed by the bargaining parties, or if the union disavows that bargaining unit, then withdrawal liability may be assessable to the employer, with certain limitations.

Contractors’ ties to multi-employer union benefit funds have ramifications in other areas:

it’s one thing for a unionized construction contractor to go out of business and sever its pension plan liabilities. There are liabilities for that contractor, however, if he keeps open part of his business (say a fabrication shop stays open while a field crew is let go), or if he closes and then re-starts his business within five years.

So, RTW is not without consequences for employers, who often cannot simply withdraw from their pension liabilities. “Withdrawal liabilities will usually bankrupt a company,” Tesija said.

Following are some other complications and opportunities brought on by Michigan’s right-to-work law:

  • Tesija is an advocate for extending existing collective bargaining contracts before the RTW law kicks in on March 28. Some unions are extending their contracts for as long as a decade. Union contracts that are signed before the RTW law becomes effective are (arguably) RTW-free for the duration of the contract.

“None of us can tell you that everything you do now will be ironclad protected,” with an extended contract in a RTW environment, Tesija said. “When you do contracts like this, you don’t want to tinker much with the language.” He said such deals provide long-term certainty for employers and union members.

  • When unions go to employers and ask them to extend the contract, it potentially places unions in a bit of a bargaining disadvantage. As a result, some employers are asking for concessions like “indemnification,” basically a clause that says unions will pick up the cost of any lawsuits that may arise.

The problem: unions would have a built-in conflict of interest in paying for attorneys for both sides, and would be violating their duty to fairly represent their members. “It’s a big problem for unions to indemnify an employer,” Tesija said.

  • Employer attorney Scharg led off his talk by saying of the right-to-work law: “Is there any benefit of RTW to contractors? Absolutely not. It offers no financial benefit to anyone in this room.”

He said “it’s not the end of the world” once RTW kicks in. Employers “can’t do anything until after the contract expires. And there is no law requiring employers or unions to tell members what their rights are” under RTW.

He added later: “I have to believe in the construction trades, I don’t think right-to-work is going to have that big an effect. These are employees who work together, who depend on each other. They don’t want to be the one who isn’t paying union dues.”

  • Unions aren’t powerless when it comes to dealing with free-riders. Non dues-payers can be barred from entering the union hall, going to events like union picnics, and taking part in death benefit programs. Their letter requesting their dues refund can be read aloud at union meetings and perhaps advertised.

“As long as there is no intimidation or coercion, you can read the (employee’s withdrawal) letter in front of the membership,” Scharg said.

The one economic weapon unions have to deal with non-dues payers is to bar them from working on targeted jobs – which are projects that utilize union dues to help union contractors win contracts. “Unions have a lot of say on how dues money is used for targeting and training within the union,” Tesija said, adding that it’s highly unlikely targeting every job would be a legally acceptable means to avoid the state’s right-to-work law.

A SYMPOSIUM on the how the state’s new right-to-work law will affect Michigan’s construction industry was held Feb. 21 at Schoolcraft College in Livonia. Among the panelists were (l-r) Michigan Building and Construction Trades Council Secretary-Treasurer Patrick Devlin, labor attorney John Tesija, employer attorney Donald Scharg, moderator James Statham, and host Patrick Baker of the Construction Association of Michigan.