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Subcontracting Clauses in
Major Collective Bargaining
Agreements

Bulletin N o . 1304
August 1961

U N IT E D S T A T E S D E P A R T M E N T O F L A B O R
Arthur J. Goldberg, Secretary
BUREAU O F LABOR STATISTICS
Ewan Clague, Commissioner

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C.




Price 30 cents




Preface
The p r e v a le n c e and c h a r a c t e r is t ic s o f su b co n ­
tra ctin g p r o v is io n s in m a jo r c o lle c t iv e b a rg a in in g a g r e e ­
m en ts in e ffe c t in e a rly 1959 a r e d e s c r ib e d in this b u l­
letin .
A m en dm en ts to the T a ft-H a rtle y A c t contained in
the L a b or-M a n a g em en t R eportin g and D is c lo s u r e A ct, 1959,
p a r tic u la r ly s e c tio n 8(e) p ertain in g to f,hot c a r g o 1 a g r e e ­
1
m en ts, m a y have an e ffe c t in la te r y e a r s on co n tra ct p r o ­
v is io n s . The study s e r v e s as a b e n ch m a rk a gain st w hich
la te r stu dies m igh t m e a s u r e the ch an ges re su ltin g fr o m
law , a s w e ll as th ose re su ltin g fr o m c o lle c t iv e bargain in g
p r a c t ic e s .
F o r this study, 1, 687 c o lle c t iv e b a rg a in in g a g r e e ­
m en ts co v e r in g 1,000 o r m o r e w o r k e r s each w e r e a n a lyzed.
T h ese a g re e m e n ts a pp lied to a p p ro x im a te ly 7. 5 m illio n
w o r k e r s , or a lm o s t h a lf the estim a ted c o v e r a g e of a ll c o l ­
le c tiv e b a rg a in in g a g re e m e n ts, e x clu s iv e o f th ose in the
r a ilr o a d and a irlin e in d u strie s.
A ll a g re e m e n ts studied w e r e p a rt o f the B u ­
r e a u s file o f cu r re n t a g re em e n ts m aintained fo r p u b lic
and g ov ern m en ta l u se under the p r o v is io n s o f the L a b o r
M anagem ent R ela tion s A c t o f 1947, as am ended.
The
p r o v is io n s o f a g re e m e n ts c o v e r in g 1,000 o r m o r e w o r k e r s
do not n e c e s s a r ily r e f le c t p o lic y in s m a lle r c o lle c t iv e b a r ­
gaining situations o r in la r g e or sm a ll u n organ ized fir m s .
The study w as con d u cted and this r e p o r t w as p r e ­
p a re d b y L eon E. Lunden, with the a s s is ta n c e o f H enry S.
R o se n b lo o m , under the su p e rv isio n o f H a rry P. Cohany
in the Bureau*s D iv isio n o f W ages and In du stria l R e la tio n s.




in




Contents
P age
P a r t I.
S cope and m e th o d _________________________________________________
R egu la tion o f su b con tra ctin g ___________________________________
C on stru ctio n and oth er s e r v ic e s ------------------------------------------------

2
3
5

T a b le:
P r e v a le n c e o f su b con tra ctin g lim ita tio n c la u s e s in
m a jo r c o lle c t iv e bargain in g a g re e m e n ts,
by in d u stry , 1959 ___________________________________________

4

P a r t II.
P ro d u ctio n p r o c e s s o r m a jo r a ctiv ity _________________________
E n fo rce m e n t o f su b con tra ctin g p r o v is io n s ____________________

9
16

A p p en d ix es:
I.
II.
III.

S u bcon tra ctin g co n s tr u ctio n and oth er s e r v i c e s __________
S u bcon tra ctin g p rod u ction p r o c e s s e s o r the m a jo r
a c tiv ity ____________________________________________________
S u bcon tra ctin g both p rod u ction p r o c e s s e s o r the
m a jo r a ctiv ity and c o n s tr u c tio n and oth er
s e r v ic e s ____________________________________________________




v

20
23

33




Subcontracting Clauses in Major Collective
Bargaining ^Agreements
Part I
or contracting out, is a long­
standing industrial practice. In the apparel and
construction industries, it is an integral part of
normal operations; in other industries, a decision
whether it is more advantageous to have a particu­
lar job or type of work done by its own work force
or by outsiders under contract is one which man­
agement is frequently called upon to make. The
building trades and apparel unions have long main­
tained a substantial degree of control of the sub­
contracting system, but the procedures in these
industries have no match among other organized
industries.
Union attitudes towards subcontracting, in
general, tend to stiffen when employment declines
and when contracting out removes work that
customarily “ belonged” in the bargaining unit.
Not only are members, jobs at stake, but concern
over union jurisdiction and the possibility that
subcontracting may be used to evade or dilute the
terms of the collective bargaining agreement are
often present. The issue has also been sharpened
by conflicts between industrial and building trades
unions as to whose members are to be employed?
on construction and maintenance work within
industrial plants. As a result, some unions have,
increasingly pressed for contract clauses governing
subcontracting.
Management tends to resist negotiating such
rules as an encroachment on its prerogatives. A
few agreements explicitly include, in so-called
“ management rights” clauses, a provision that
decisions regarding subcontracting are among
management's unrestricted prerogatives, but the
low incidence of such statements is of little signifi­
cance in view of the widespread reluctance on the
part of management to define all management
rights in a collective bargaining agreement.
As this study reveals, fewer than one out of
four major agreements in effect in 1959 made any
reference to subcontracting, and they handled the
problems of preserving employment opportunities
S u b c o n t r a c t in g ,




and protecting agreement standards in diverse
ways. A number of agreements established con­
trols related directly to in-plant workers, such as
barring subcontracting either when workers were
on layoff or when letting the contract would
cause layoffs or part-time work. Other agree­
ments approached the job preservation goal by
allowing subcontracting only when management
had some compelling reason connected with skill
and equipment requirements, production sched­
ules, or cost considerations. In protecting inplant wages, hours, and working conditions, a
significant number of clauses required the sub­
contractor either to comply with the prime
employer's collective bargaining agreement or to
sign a union contract himself. Some subcontract­
ing controls, for example, those requiring prior
consultation with the union, could serve both
purposes, since they afford the union an oppor­
tunity to marshal arguments for keeping work in
the plant or check on the status of the subcon­
tractor to make sure that he was not undercutting
union standards. Some clauses were so vague as
to give little, if any, clue as to the nature of the
understanding between the parties.
In the absence of a subcontracting clause in the
agreement, does the employer have a free hand
in subcontracting as he pleases? Some unions
have disputed this, and arbitrators to whom such
disputes have been referred differed in their
decisions and reasons. Three lines of reasoning
are discernible. In one camp are those who hold
that if management's right to subcontract was to
be abridged, a specific clause would have been
written to that effect. This point of view was
expressed in a recent decision as follows:
In summary, however, the arbitrator must find that a
clear understanding exists in the field of labor-management
relations that where the parties intend to prevent sub­
contracting such a specific provision is incorporated in
contracts to limit management’s right in this matter.1
1Minneapolis-Moline Co. v. United Automobile Workers, 33LA893.

2

Other arbitrators have decided that subcontract­
ing is barred when it would violate the recognition
clause, the seniority clause, or any other general
provision of the contract. For example, it is
reasoned, when the company agrees with the union
on wages, hours, and working conditions of em­
ployees in the bargaining unit, it is obligated not
to undermine or seriously deplete the bargaining
unit as established in the agreement’s recognition
clause. In a case where the issue concerned man­
agement’s right to subcontract in order to achieve
savings, the arbitrator’s decision against the com­
pany rested on these grounds:
. . . Accordingly the issue here is not the right of the
company to remove one janitorial job. Rather the com­
pany is inevitably posing the question of its right under
paragraph 51 [the management rights clause] to remove
jobs from the bargaining unit whenever it can subcontract
them at less than contract rate.
Such a broad interpretation of paragraph 51 would, in
effect, include in this contract provision the right to emas­
culate the bargaining unit and is therefore in direct conflict
with the recognition clause. Therefore, the company’s
subcontracting of janitorial work cannot be sustained.2

Some recent arbitration decisions have reflected
a third position, namely, that in the absence of a
contract clause prohibiting subcontracting there
is still an implied limit on subcontracting, but not
an absolute prohibition. The circumstances in
each case would determine whether subcontracting
constituted a violation of the agreement. One
arbitrator reasoned as follows:
I do not mean to suggest that past practice and recent
negotiating history necessarily refute the union’s claim on
behalf of an implied limitation on the company’s power to
subcontract . . . Even without an explicit limitation
some kind of implied limitation arises out of the very nature
of a collective bargaining agreement. However, this his­
tory [of the company’s purchases of electric power] and the
specific limitation on purchasing [electric] power to which
it finally led should be borne in mind in giving consideration
to the scope of any implied provision against contracting
out which one may be inclined to draw.3

The arbitrator then went on to explain that as long
as contracting out did not threaten the integrity
of the bargaining unit, the particular circum­
stances, as in the case before him, governed, and
the company could contract out.
Summarizing the opinions commonly expressed
as to whether a subcontracting dispute is arbitrable
in the absence of specific agreement, one arbitrator
noted that “ The effort to squelch the issue at the



threshhold . . . has been pretty well settled in favor
of arbitrability.” 4 In mid-1960, the U.S. Supreme
Court upheld this contention in a case involving
the United Steelworkers and the Warrior and
Gulf Navigation Co.6 Reasoning that grievance
and arbitration procedures in collective bargaining
agreements effectuated congressional policy of
promoting industrial peace, the Court concluded,
first, that under section 301 of the Labor-Manage­
ment Relations Act of 1947 an order to arbitrate
could not be denied unless there was forceful evi­
dence that a certain matter was to be excluded
from arbitration, and, second, that “ doubts should
be resolved in favor of coverage.” The Court
found no such forceful evidence in the case before
it. On the other hand, there remained the issue
of whether the collective bargaining agreement
had been violated, on which the Court said:
. . . . There was, therefore, a dispute ‘as to the meaning
and application of the provision of this agreement’ which
the parties had agreed would be determined by arbitration.
The judiciary sits in these cases to bring into operation
an arbitral process which substitutes a regime of peaceful
settlement for the older regime of industrial conflict.
Whether contracting out in the present case violated the
agreement is the question. It is a question for the arbiter,
not for the courts.

Scope and M ethod
For this study, the Bureau of Labor Statistics
examined 1,687 major collective bargaining agree­
ments covering 1,000 or more workers each, or
virtually all agreements of this size in the United
States exclusive of those in the railroad and air­
line industries.6 These agreements applied to
approximately 7.5 million workers— almost half
the number estimated to be under collective
bargaining agreements except those in the railroad
and airline industries. About 4.6 million workers
were covered by 1,063 contracts in manufacturing
and 2.9 million were covered by 624 contracts ill
nonmanufacturing industries. All contracts were
in effect at the beginning of 1959.*

a Gulf Oil Corp. y. Oil, Chemical and Atomic Workers, 33LA855.
s Kennecott Copper Corp. v. International Brotherhood of Electrical Workers,
34LA763.
* United Automobile Workers v. Black-Clawson Co. 34LA215.
»363 U.S. 574.
« The Bureau does not maintain a file of railroad and airline agreements
hence their omission from this study.

3

For the purposes of analysis, provisions regulat­
ing subcontracting were classified into three
categories: (1) those pertaining solely to the con­
tracting out of construction, maintenance, and
installation services; (2) those referring to the
contracting out of part of the production process or
of the major activity; and (3) those dealing with
both types of subcontracting.7
A variety of contract provisions having certain
features relevant to subcontracting were con­
sidered to be outside the scope of the study. For
instance, clauses that banned converting a worker
from an employee into a subcontractor (prevalent
in the construction industry) were omitted,8 as
were bans on “ home work” (apparel). Other
regulatory clauses excluded from the study were
those relating to concession and leasing arrange­
ments in retail establishments by manufacturers
or distributors, and to commission work, fre­
quently practiced, for example, in the cleaning and
dyeing industry.®

Regulation of Subcontracting
Among the 1,687 agreements studied, there
were 378 with limitations on subcontracting, only
4 of which prohibited the practice outright. (See
table.) Five did not specify the nature of the
restriction. The remaining 369 agreements per­
mitted management to subcontract, subject to
certain conditions or limitations. On the other
hand, 1,309 agreements made no reference to
limiting subcontracting, among them were 4 that
specifically included contracting out among
management's unrestricted prerogatives.
One of the four clauses expressly prohibiting
contracting out was stated as follows:
No contracting within the firm or subcontracting be­
tween firms shall be permitted.

The following excerpts from textile and paper
products agreements illustrate how the assertion
of management's unlimited right is treated:
It is recognized and agreed that the management of the
plant and the direction of the working force is vested in
the company. Among the rights and responsibilities
which shall continue to be vested in the company, but not
intended as a wholly exclusive list of them, shall be: The
right to increase or decrease operations; to remove or
install machinery; to determine schedules of production;
. . . and to contract work in its discretion.
♦

*

*

It is understood that the company may employ outside
contractors to perform work in the mill.



Of the 369 agreements with specific limitations,
232 were concerned with subcontracting of part
of the production process or the major activity of
the employer, 51 referred solely to the contracting
out of construction, maintenance, and installation
services, and 86 regulated subcontracting in both
areas. Most of the 318 clauses which regulated
subcontracting of either the production process or
the major activity were found in nonmanufac­
turing industries, primarily construction (79),
electric and gas utilities (44), transportation (23),
and communications (20). However, clauses also
appeared in the apparel (42), transportation equip­
ment (17), and petroleum refining (12) industries.
The 137 clauses concerned with construction,
maintenance, and installation services were more
prevalent in manufacturing than in nonmanufacturing, appearing mainly in transportation
equipment (20) and petroleum refining (10).
The transportation equipment agreements, in­
cluding several very large contracts, covered
approximately 640,000 workers, or slightly more
than half of the 1.2 million workers covered by
agreements with construction subcontracting
clauses. Electric and gas utilities, alone among

7 Thirty-eight agreements permitting subcontracting under certain con­
ditions were so vague that categorizing them into the three groups noted above
raised particular difficulties. Allocation was achieved by examining the
makeup of the bargaining unit as well as the practices of the industry as
reflected in other clauses.
A number of agreements in petroleum refining, electric and gas utilities, and
communications specifically mentioned construction and maintenance sub­
contracting, but were classified as “ production” or “ major activity” sub­
contracting, since construction and maintenance of oil and gas pipelines and
electric power and communications networks were considered an integral
part of the production process or major activity.
8 Prohibitions against members becoming subcontractors were also noted
in a small number of union constitutions, usually those of construction
unions. Typical is the following section from the Carpenters* constitution:
“ No member of the United Brotherhood shall lump, subcontract or work
at piecework for any owner, builder, contractor, manufacturer, or employer.
For a violation of this paragraph or any part of it the member shall be fined
not less than $10 or be expelled.”
Other unions having similar constitutional bans include the Plumbers,
Journeymen Stone Cutters, Asbestos Workers, Boilermakers, Bricklayers,
Painters, and Jewelry Workers.
* Another approach to subcontracting outside the scope of this study was
letters of intent that set forth understanding and company policy in this
area, discussed by Donald A. Crawford and Leonard Sayles in the Conference
Proceedings on Industrial Relations in the 1960's—Problems and Prospects to
be published soon by the Wharton School of Finance and Commerce. As
an example, Crawford cited at length the General Motors letter to its general
managers on subcontracting maintenance and certain tool and die work.
He also noted that letters of intent often represent a voluntary restriction
b y management on its own freedom to contract out, which sometimes goes
beyond arbitration awards or contract language negotiated by union and
management. According to Professor Sayles, letters of intent are “ perva­
sive.”

4
P r e v a l e n c e o f S u b c o n t r a c t in g L im it a t io n C l a u s e s in M a j o r C o l l e c t iv e B a r g a in in g A g r e e m e n t s , b y I n d u s t r y ,

1959
Conditions or limitations on subcontracting
of—
Number
studied
Industry

Production
process or
major
activity

Construction, Both produc­
maintenance, tion process
and installa­ and services
tion services

Subcontract­
ing specifically
prohibited

Nature of
restrictions
unspecified

No reference
to subcon­
tracting 1
*

Work­
Work­
Work­
Work­
Work­
Work­
Work­
Agree­ ers Agree­ ers Agree­ ers Agree­ ers Agree­ ers
Agree­ ers Agree­ ers
ments (thou­ ments (thou­ ments (thou­ ments (thou­ ments (thou­ ments (thou­ ments (thou­
sands)
sands)
sands)
sands)
sands)
sands)
sands)
All industries.............................................................. 1,687 7,477.3
Manufacturing...........................................................

1,063 4,555.3

Ordnance and accessories___________________
Food and kindred products_________________
Tobacco manufactures______________________
Textile mill products _____________________
Apparel and other finished products_________
Lumber and wood products, except furniture..
Furniture and fiYtnrAs _ __ _ _ _
Paper and allied products.. ________________
Printing pnhlishipir, and allied industries
Chemicals and allied products______________
Petroleum refining and related industries_____
Rubber and miscellaneous plastic products___
Leather and leather products________________
Stone, clay, and glass products______________
Primarv metal industries___________________
Fabricated-metal products ________________
Machinery, except electrical_________________
Electrical machinery, equipment, and supplies
Transportation equipm ent_____ ___________
Instruments and related products
________
Miscellaneous manufacturing industries ____

15
39.4
120
405.8
11
27.6
33
78.4
45
464.1
37.2
13
20
32.1
54
118.0
31
62.2
57
113.6
23
63.8
24
128.1
62.5
20
38
100.8
124
724.8
52
146.4
283.9
117
438.3
100
127 1,152.2
24
54.2
15
22.5

Nonmanufacturing....................................................

624 2,922.0

Mining, crude petroleum, and natural gas pro­
duction ________________________________
Transportation3 ___ ______________________
Communications _________________________
Utilities: Electric and gas___________________
Wholesale trade____________________________
Retail trade _____________________________
Hotels and restaurants
__________________
Services.___________________________________
Construction __________ ___ ___ __ ______
Miscellaneous nonmanufacturing industries ...

17
95
79
78
12
92
36
55
155
5

252.7
573.2
558.1
200.5
21.6
245.1
176.8
184.9
701.9
7.4

232 1,327.6

51

434.1

86

783.9

4

10.4

5

32.1 1.309 4,889.3

406.2

49

425.0

54

661.9

3

9.0

1

24.0

7

30.2

1
3

1.1
5.9

4

64.0

1

6.0

4
33
1
1
1

10.6
296.3
4.0
2.5
1.6

1

8.0

9
2
1
1

153.2
3.8
1.5
1.5

1

1.5

1
2
1
6

1.2
5.7
3.1
14.8

5
10

10.4
27.0

1
3
2
1
6
2
2

1.0
6.4
2.4
5.2
14.3
2.7
4.5

158

921.4

19
13
27
3
9

228.3
130.1
60.5
3.5
38.9

7
79
1

13.7
444.1
2.5

74

1 Includes 4 agreements that specifically include subcontracting among
unrestricted management prerogatives.
3 A company wide agreement that delegates authority to negotiate on sub­
contracting to the local plant level.
3Excludes railroad and airline industries.




2

5.2

4

5.0

6

70.2

5
7
2
7
2
9

19.6
32.8
4.0
10.9
2.3
260.2

2

2

31
1
1
2
3
11
3
1

1.2
1.4
4.2
4.1
379.8
7.7
2.3

1

32

122.1

1

1.4

9.1

3
4
7
17

1.9

8.1

5.9
12.4
57.4
44.5

1

4

1.5

9.1

24.0

1

1.4

44

8.1

882 3,029.3
14
105
U
28
3
9
18
50
31
47
11
16
14
33
115
46
106
94
101
19
11

38.3
299.8
27.6
59.8
14.6
28! 0
28.1
109! 8
62.2
97.1
31.1
30.8
47.7
81.2
689.8
134.7
266. &
426.7
498.0
43.8
14! 2

427 1,860.0
14
72
59
32
9
83
36
46
72
4

246.8
332.6
370.6
86.5
18.1
206.2
176.8
168.0
249.7
4.9

4 Agreements disallow subcontracting of labor services only and working
for a lump sum payment for a specific job, but do not restrict subcontracting
that includes both labor services and materials.
N ote: Because of rounding, sums of individual items may not equal
totals.

5

the nonmanufacturing industries, had a signifi­
cant concentration of clauses in this area (19).
Affiliates of 56 national and international
unions were party to major agreements which
regulated subcontracting. The three most active
in writing such provisions were the International
Brothernood of Teamsters (42), the International
Brotherhood of Electrical Workers (34), and the
International Ladies’ Garment Workers’ Union
(34). Other frequent negotiators were the United
Automobile Workers (20), Hod Carriers (17),
Carpenters (15), Oil, Chemical and Atomic
Workers (14), Steelworkers (15), Communication
Workers (12), Operating Engineers (10), and
Machinists (10). Although the Amalgamated
Clothing Workers held only eight subcontracting
agreements, one of these—with the Clothing
Manufacturers Association of the United States
of America—was a national agreement in the
men’s and boys’ clothing industry covering
150,000 workers.

Construction and Other Services
Subcontracting provisions concerned with con­
struction, maintenance, and installation services
stressed preservation of job opportunities by
setting prior conditions for management to meet,
in contrast to the protection of contract standards
treatment used, as will be noted in part II of this
study, in construction and apparel contracts.
The more common provisions dealt with layoff,
the union voice in the subcontracting decision,
and skill and equipment requirements. 10
Employment Effects. A substantial number of
agreements prohibited subcontracting when quali­
fied in-plant workers were already on layoff or on
part time, or when layoff or part time would
result. Under a few clauses, in-plant workers
must be fully supplied with work for subcontract­
ing to be permissible. Several provisions allowed
the company to exercise its subcontracting right
provided that it would use its best effort to place
its employees who are laid off or on part time
with the subcontractor. In stone, clay, and glass
products and in chemicals, clauses including
this proviso were identical in language; the re­
maining clauses, all in petroleum refining, were
similar in content. Examples of both are pre­
sented above. Note that, in both, the prime

1® See samples in appendix I.


employer’s liability is limited
employees:

to

“ qualified”

If a contract is let by the company for any repairs or
construction work, the company will attempt fairly to
employ directly or, if practical, through any contractor,
as many idle employees as is possible, provided they are
qualified for the work available, in making repairs to
buildings, tanks and equipment, or in building new
structures . . .
*

*

*

When contract work is necessary, the employer will
use its best efforts with the contractor to secure employ­
ment on the contract work for former employees laid
off not more than 180 days (but not including discharged
employees) of the employer who are qualified and who
may be available for such work.

In a few clauses, mainly found in Steelworker
agreements, management agreed to a general policy
of giving preference for maintenance and construc­
tion work to the bargaining unit, as for example,
in the following electrical machinery provision:
Outside Contract of Work in Plants. The employees
covered by this agreement shall be given preference for
maintenance and construction work in the plant to the
fullest extent practicable.

Upgrading of jobs to keep work in the plant was
mentioned in one agreement:
(1) So far as possible, with the work force available,
minor construction and all maintenance jobs will be
performed by [the company’s] work force.
(2) So long as it is consistent with maintaining good
operations, management will attempt to upgrade craft
and trade jobs to perform the work as mentioned in the
above paragraph.

Notice to Union. Numerous clauses allowed the
union to participate in the making of subcontract­
ing decisions. Only one agreement banned sub­
contracting without union approval and one called
for notice after a contract had already been let;
the largest number required simply that the union
be notified or consulted. Some did not specify
whether notice had to be given before or after the
decision; these were found in the chemical, glass,
machinery, electrical machinery, transportation
equipment, communications, and utilities agree­
ments. Typical of the clauses where the timing
of notice was not explicit were the following
machinery and electrical machinery provisions:
If it shall become necessary to use outside contractors
to perform work in the plant normally performed by our
employees, the union shall be notified and given the
reason why [the company] is required to have outside
contractors enter the plant.

6

*

*

*

. . . The company agrees to keep the union informed
of the status and scope of its subcontracting program.

By far the larger number of clauses, however,
required advance notice of subcontracting. Fully
one-third of the agreements containing this proviso
were concentrated in the transportation equip­
ment industry, from which the following examples
are cited:
When plant maintenance or construction work is let to
outside contractors, the corporation will, before the work
is started in the plant, give reasonable notice to the union
of the nature of the work and the reason for such action.
*
*
*
Before bringing outside general contractors into the
plant for changeover and other construction work, the
company will discuss the matter with the shop committee
and inform them of the nature of the work expected to be
performed.

Most clauses defined the union body to be noti­
fied. Typically they were the shop committee,
union scale committee, union executive board,
chief department steward and the union incentive
committee, business managers of the union, or the
workmen’s committee. Two clauses provided for
expansion of standing labor-management com­
mittees when subcontracting was to be discussed.
One required that supervisors directly involved in
the decisionmaking participate in the discussion
along with the industrial relations manager; the
other gave the union the right to include its
grievance committee along with its department
steward in subcontracting discussions.
Only one agreement required that the prior
notice be in writing:
. . . Before awarding to outsiders contracts for major
alterations to buildings or equipment, or contracts for new
buildings or equipment, the company will notify the union
in writing.

Three agreements specified length of notice the
company must give the union before letting a
contract. One required 10 days’ notice, a second
established a regular weekly review of “ the cir­
cumstances involved in the propriety of awarding
particular contracts,” and the third called for
quarterly meetings to discuss such matters.
Overtime and Other Special Rules. In three situ­
ations, the use of subcontractors was discouraged
by requiring the company to pay overtime, for a




“ sixth day” or a “ 48-hour week,” to inplant work­
ers with the same skills as the subcontractor’s
employees, as for example, in the following food
agreement:
Mechanical workers shall be scheduled on a 48-hour or
more week as long as an outside contractor is in the plant
doing work of a mechanical nature except for permissible
contract work set forth below . . .

Other clauses called for overtime for corresponding
in-plant workers when the subcontractor’s crew
worked overtime:
When outside contractors are required to perform work
in the plant on an overtime basis, employees who cus­
tomarily perform the same work will be given equal op­
portunity for overtime work except for the following:
(a) new construction, (b) erection of large fixtures built
outside the plant, (c) work which of necessity must be
performed during nonoperating hours.

Exclusions similar to those indicated in the
latter clause were found in all agreements that
granted overtime to in-plant workers when the
subcontractor’s crew was on overtime.
Some clauses, whose meaning is not explicit,
created a general commitment on the part of the
employer to take “ worker interests” into account.
A majority of such clauses were included in the
management prerogative section of the agreement,
as, for example, in this electrical machinery
agreement:
The union recognizes that there are functions, powers,
and authorities that belong solely to the company, promi­
nent among which, but by no means wholly inclusive, are
the functions of introducing new or improved production
methods or equipment . . . as well as the assignment of
work to outside contractors after due consideration by the
company to the interests of the regular employees.

Of the clauses which defined worker interests,
only one required the company to provide “ full
information to the union committee regarding
reasons for assignment of work to outside
contractors.”
Three clauses addressed themselves to the rela­
tionship between employees of the prime employer
and those of the subcontractor. In one glass
agreement, company maintenance employees were
allowed to refuse an assignment which would re­
quire them to work with the subcontractor’s
employees. Another glass agreement made the
same allowance, but recognized that at times such
work might be “ desirable” from a company view­

7

point, in which case there would be negotiations
for a “ temporary adjusted rate” :
When construction work is being performed by outside
contractors, company employees are not to be required to
work in conjunction with contractors’ employees.
In situations where the company considers it desirable
to employ its own maintenance employees in construction
work in conjunction with contractors’ employees, the union
and the company are to negotiate and agree as to whether
or not such employees are to be paid at a temporary ad­
justed rate.

A number of provisions, distributed primarily
among the transportation equipment, chemicals,
food, and glass industries, allowed subcontracting
where either specialized equipment, specialized
skills, or both, were needed. The following ma­
chinery clause is an example:
The company recognizes that one of its responsibilities
is to keep the present work force working at least the hours
in the regularly scheduled week whenever possible, and
with this in mind, the company will not subcontract any
work usually assigned to regular employees, unless (1)
special skill or equipment is unavailable . . .

Most clauses in this category, however, did not
refer to “ special skill and equipment.” Skills,
for instance, were generally described as available,
sufficient, qualified, capable, able to do, experi­
enced, proper. Similarly, equipment was defined
as necessary, available, appropriate, capable, and
proper and sufficient. For example:
So long as appropriate equipment and qualified em­
ployees in this bargaining unit are available and not other­
wise engaged in current work, the company will not con­
tract out repair or maintenance work . . .
*

*

*

It is agreed that whenever proper equipment and em­
ployees are available, the company will not subcon­
tract . . .
*

*

*

The corporation agrees, as a policy, to refrain from hav­
ing maintenance, installation, and construction work done
in its plants by the employees of others, or from sending
such work to outside concerns, when there are employees
and facilities in the plants capable of doing this work . . .

In the following clause, the adequacy of super­
vision is also a factor:
This clause is not intended to restrict the company in
its right to let contracts . . . when it feels it necessary or
expedient to do so, such as not having the necessary
equipment or supervision . . .

Several agreements established limitations
based upon production and cost considerations.
Some prohibited subcontracting except during



peak periods or emergencies, while the remainder
were concerned with the lack of room for addi­
tional help, the inability to meet an established
delivery date, and maintaining good customer and
public relations. Additional provisions allowed
subcontracting where it represented savings in
cost or time or improved the efficiency of the
operations.
As previously noted, a number of the sub­
contracting provisions for construction, mainte­
nance, and installation work were concerned with
safeguards for the in-plant workers' wages, hours,
and conditions. Among these, a few required
the subcontractor to be under union contract,
a few demanded compliance with the prime
employer's agreement, and two prohibited con­
tracting out when the purpose was evasion of
the prime employer's contract.
Several provisions required the subcontractor
to employ union labor and to use union-made
material. On the other hand, one utility agree­
ment specified that the employees of subcon­
tractors did not have to be union members.
Another clause compelled the subcontractor to
live up to general union standards, and 15— the
largest concentration of provisions attempting
to protect work standards—provided that sub­
contractors' employees must receive either pre­
vailing area wages or not less than the contract
minimums, as illustrated in the following utility
contract:
Where the [company] enters into contracts for the
performance of work which requires the employment of
laborers and mechanics in the construction, alteration,
maintenance, or repair of buildings, dams, locks, or other
projects, such contracts shall contain a provision that
not less than prevailing rates of pay for work of a similar
nature prevailing in the vicinity shall be paid to such
employees of the contractor, which rates shall not be less
than the rates paid by [the company] . . . to its employees
doing similar work.

Other contracts took the opposite stand,
specifically stating that the prime employer would
not be responsible for the wages, hours, and work­
ing conditions established by its subcontractors:
The company will not undertake to regulate the
conditions of employment which may prevail under
outside contracts or subcontracts covering such con­
struction, building, or maintenance.

Finally, a few petroleum refining agreements
protected the seniority of any in-plant employee

8
who might work for one of his employer’s sub­
contractors while on temporary leave of absence:
Employees granted leaves of absence to work for a
contractor performing services for the employer shall
retain their seniority on the same basis as though they
had continued to work for the employer. H

M ajor Versus Routine Services. A number of
agreements differentiated between major or new
construction, maintenance, and repair work and
that which was ‘ *
*normal” or “ routine.” Typically,
such clauses reserved normal work for in-plant
workers and allowed major or new construction
and repair to be contracted out:
So far as possible with the work force available, minor
construction and all maintenance jobs will be performed
by [the company’s] work force.




♦

*

*

No job shall be let to outside contractors, other than
major construction and major repair, and fabrication,
installation, and use of patented or highly specialized
equipment . . .
*

*

*

The company shall have the right to contract with
outside contractors for maintenance, construction, and
repair work when in the judgment of the company such
services are required . . . The company will not contract
routine maintenance work when sufficient qualified
employees are available on the payroll to do the work . . .

This policy of allocating the work according to
whether it was major or normal and routine
parallels jurisdictional agreements worked out
between the building trades and industrial unions
in several local situations.12

11 See sample in appendix HI.
* 2 Such agreements were reached between the building trades and the
United Automobile Workers in Detroit, several industrial unions in Con­
necticut, and the Steelworkers in Youngstown, Ohio.

9

Subcontracting Clauses in Major Collective
Bargaining Agreements
Part II

Production Process or Major Activity
Provisions regulating subcontracting of any
part of the production processes or major activity
of the employer were found in 318 of the 378
major agreements having subcontracting clauses.
(See p. 582, June issue.) The construction and
apparel industries, with a long history of such
arrangements, have worked out elaborate clauses
controlling contracting out.
Construction. In the construction industry, sub­
contracting is generally accepted by unions and
employers as a normal condition of work. Few
provisions were found that attempted to preserve
job opportunities by creating certain conditions
under which management could contract out.
For example, only one clause prohibited sub­
contracting if it would result in layoff, and a
very small number required the company to
notify the union in advance of subcontracting
or to subcontract only after receiving union
approval. On the other hand, the protection of
contract standards was of major interest. The
most common restrictions required the subcon­
tractor to comply with the terms of the prime
employer's contract, to have a union agreement
of his own, or to employ union labor and use
union-made material.
The single most frequent requirement, found
in more than 50 major contracts, called for the
subcontractor to comply with all the terms and
conditions of the prime employer's agreement.
This provision “ blankets in" the subcontractor,
no matter what project he works on in the local
union's jurisdiction or which prime employer he
works for. Here are two examples of how such
contract-compliance clauses are worded:
Any subcontractor on the site shall be covered by the
conditions of this agreement.

*



*

*

The terms and conditions of this agreement, insofar as
it affects . . . the individual employer, shall apply equally
to any subcontractor under the control of or working
under contract with such individual employer on any
work covered by this agreement, and said subcontractor
with respect to such work shall be considered the same
as an individual employer covered hereby.

A number of clauses in this category required
written guarantees of subcontractor compliance.
Some stipulated that the subcontractor must
either sign the prime employer's collective bar­
gaining agreement or a “ short form" contract
(a pledge of compliance), while others obligated
the prime employer to insert a clause into the
subcontract requiring the subcontractor to com­
ply with the collective bargaining contract. Both
are illustrated below:
Any employer or shop signed to this agreement shall
not sublet to or from any . . . company . . . unless the
work to be performed is performed under the terms of
this contract, and the employer whose employees perform
such work is either signatory to this contract or has
signed a short form contract which requires acceptance
of and being bound by all the terms and conditions o f
this contract.

*

*

*

That if the contractors, parties hereto, shall subcon­
tract work as defined herein, provision shall be made in
said subcontract for the observance by said subcontractors
of the terms of this agreement.

While the great majority of these compliance
clauses required rigid observance of the prime em­
ployer's contract, a smaller number established the
prime employer's labor agreement only as a
standard below which wages, hours, or working
conditions for the subcontractor's employees could
not fall. Some contracts required the subcon­
tractor to grant “ equivalent" terms or conditions
“ no Jess than" those of the prime employer. In
other provisions, compliance with the wage sched­
ule was required, while the prime employer was
duty bound to try to achieve observance of the

10

rest of the contract. Illustrated below is a pro­
vision requiring the subcontractor to comply with
terms “ no less than” those in the prime employer’s
agreement:
If the employers, parties hereto, subcontract jobsite
work, provision shall be made in such subcontract for the
compliance by the subcontractor with terms not less than
those contained herein.

Closely allied to this approach was a second
large group of construction industry contracts
which required the subcontractor to be under
agreement with the same local, with another local
of the same international union, with a recognized
building trades union, or with an AFL-CIO affil­
iate. Such clauses are further discussed under
the following section covering the apparel in­
dustries.
Provisions requiring the subcontractor to em­
ploy union labor or use union-made materials, or
both, comprised a third group of limitations upon
construction industry subcontracting. Among
clauses specifying the use of union labor, one
simply stated that the subcontractor must employ
union members; others tailored their language to
fit the particular crafts involved; and in one in­
stance, the subcontractor agreed to hire at least
75 percent of his workers through the unions
hiring hall. In its simplest form, the union labor
limitation read as follows:

shall have freedom of choice in the purchase of materials,
supplies, and equipment, save and except that every rea­
sonable effort shall be made by these contractors and their
subcontractors performing such work on the project to re­
frain from the use of materials, supplies, or equipment
which use shall tend to cause any discord or disturbance
on the project.

There was a scattering of various other restric­
tions in construction industry clauses. A few
obligated the subcontractor to register with the
union or the employers’ association (a limitation
also common in the apparel industry); others re­
quired that prevailing area wage rates be paid the
subcontractor’s workers; some directed the prime
employer to protect the wages and other standards
of the subcontractor’s workers (also prevalent in
the apparel industry); and one prohibited subcon­
tracting if its purpose was evasion of the terms
of the prime employer’s labor contract.
In one construction agreement a subcontractor
was prohibited from contracting out any part of
his subcontract. Another clause provided that,
with several exceptions concerning certain kinds
of work, the prime employer could subcontract
only to one subcontractor— a provision somewhat
similar to apparel agreements which confine a
prime employer to his registered subcontractors.

A member of the union shall be employed on all sub­
contracts made by the general contractor or by the suc­
cessor or assign of the general contractor on work where
the services of an engineer, apprentice engineer, foreman,
oiler, or mechanic is necessary.

Those provisions which required the use of
union-made material— so-called “ hot cargo” type
clauses—were designed to facilitate mutual aid
among unions in maintaining union standards. Al­
though such clauses were banned by the LaborManagement Reporting and Disclosure Act of
1959, certain exceptions were written into the act
for the construction and apparel industries.13 In
marked contrast to previously cited clauses, those
attempting to ban the use of nonunion materials
were almost identically phrased. Such familiar
terms as “ nonunion” or “ unfair” materials were
not used; uniformly, the clauses merely requested
the employers to make “ every reasonable effort”
to use materials that would not cause “ discord or
disturbance” on the job, as in this provision:
The contractors and their subcontractors performing
work covered by the terms of this agreement on a project



13 The Labor-Management Reporting and Disclosure Act of 1959 added the
following subsection to section 8 of the National Labor Relations Act, as
amended:
(e) It shall be an unfair labor practice for any labor organization mid any
employer to enter into any contract or agreement, express or implied, whereby
such employer ceases or refrains or agrees to cease or refrain from handling,
using, selling, transporting or otherwise dealing in any of the products of any
other employer, or to cease doing business with any other person, and any
contract or agreement entered into heretofore or hereafter containing such an
agreement shall be to such extent unenfordble and void: Provided, That
nothing in this subsection (e) shall apply to an agreement between a labor
organization and an employer in the construction industry relating to the
contracting or subcontracting of work to be done at the site of the construc­
tion, alteration, painting, or repair of a building, structure, or other w ork:
Provided further, That for the purposes of this subsection (e) and section 8(b)
(4) (B) the terms “ any employer,” “ any person engaged in commerce or an
industry affecting commerce,” and “ any person” when used in relation to the
terms “ any other producer, processor, or manufacturer,” “ any other em­
ployer,” or “ any other person” shall not include persons in the relation of
a jobber, manufacturer, contractor, or subcontractor working on the goods or
premises of the jobber or manufacturer or performing parts of an integrated
process of production in the apparel and clothing industry: Provided further,
That nothing in this act shall prohibit the enforcement of any agreement
which is within the foregoing exception.
Virtually all agreements used in this study were negotiated prior to the
passage of the Labor-Management Reporting and Disclosure Act, September
1959.

11

Apparel. As in the construction industry, con­
tracting out is well integrated into the normal
operations of the apparel industries. The degree
of contracting out in the latter industries ranges
from certain specialized operations (e.g., making
canvas coat fronts) to the entire manufacturing
process. The regular (“ inside” ) shop normally
performs all manufacturing operations, but it may
use contractors during peak periods or for special­
ized operations. Other manufacturers could not
operate without subcontractors. Contractors sell
their services to the manufacturers and, through the
process of industry-union control, are “ attached”
to one or more manufacturers or they may pick
up work where they find it. The ramifications of
the contracting-out system in apparel industries
can not be adequately described through an
analysis of collective bargaining agreements; this
article, therefore, attempts to highlight those ele­
ments of contractual regulation which may have
meaning to other industries.
Multiple unionism does not exist in any branch
of the apparel industry where subcontracting is
common; hence, aside from insuring that work
will go to a union shop, the loss of employment
opportunities for members of the union is no longer
a significant factor in subcontracting regulations.
However, the unions are concerned with preserving
work for inside employees. Otherwise, the major
restrictions found in apparel industry agreements
were directed at protecting contract standards.
These included registration of subcontractors,
wage guarantees for the subcontractor’s employees,
and “ struck work” provisions.
A large number of apparel industry provisions
required that inside employees be “ fully supplied
with work,” “ fully employed,” or “ fully and sub­
stantially employed” before the employer could
subcontract. Other provisions prohibited subcon­
tracting if it would cause layoff or if the inside
workers were already on layoff. Exceptions from
the “ fully supplied” requirement, noted in a few
agreements, were situations in which (a) the prime
employer could prove that he was not at fault for
any slack work period that subsequently developed
while the subcontractor continued to be fully em­
ployed and (b) the subcontracted work differed
from the kind being done in the plant.
To stabilize industry conditions, several multi­
employer agreements provided that, dining slow



periods, the available work was to be shared be­
tween the employees of the contractor and those
of the prime employer. Some protected “ per­
manent” or “ registered” subcontractors by requir­
ing that they be fully supplied with work before the
prime employer could contract out to additional
contractors.
A member of the association who employs contractors
exclusively working for him shall share work with the
contractors during slow periods of employment. Should
a member of the association employ contractors who are
not exclusively working for him, the union and the associa­
tion shall decide upon the percentage of work such con­
tractors shall receive from the member of the association
during the slow periods of employment.

*

*

*

No work shall be given by such [employer] to any other
contractor than those so registered unless and until both
the employees of the [employer’s] factory and those of the
registered contractors are fully employed . . . .

In establishing the method by which work should
be divided between inside and outside shops, two
different plans were generally used: a “ percentage”
plan (alluded to in the second preceding clause)
and one— more prevalent— based upon the number
of machine operators employed in the inside and
outside shops. Examples of the two methods are:
Where the employer maintains an inside shop and also
gives work to be done in contracting shops, then and in
that event, when slack sets in, the work to be sent to the
contracting shop shall be the same percentage of the total
work done as prevailed during the busy season, and such
work shall be distributed substantially equally among the
contractors permanently registered. The principle of
equal division between the inside and outside shops shall
not apply in those situations where the type of work
regularly performed in inside shops differs substantially
from the type of work regularly performed in outside
shops.

*

*

*

A member of the association who maintains an inside
shop and who deals with and gives work to contractors
who employ workers in the crafts covered by this agree­
ment shall, when there is insufficient work, distribute his
work on the basis of the number of machine operators
employed, equitably to and among his inside shop and to
such permanent contractors designated by him as work
exclusively for him, and to such other permanent contrac­
tors hereafter designated by him, with due regard to the
ability of the contractors and the workers to produce and
perform.

Besides these “ full work” and “ work sharing”
provisions, there were a number of other restric­
tions scattered among the apparel contracts that

12

set conditions which management had to meet
before it could subcontract. A few obligated the
company to notify the union in advance of sub­
contracting, and others required union approval
of contracting out. A number of agreements
banned contracting out where the prime employer
had available the necessary skills and equipment,
while subcontracting was permitted in others if it
represented savings to the company, if the com­
pany had no room for additional workers, or if
there was an emergency or an unusual backlog of
orders.
In an effort to protect contract standards, a
small number of apparel provisions banned con­
tracting out if its purpose was evasion of the
terms of the prime employer’s agreement. Several
clauses insisted on compliance with the prime
employer’s labor agreement, but most barred sub­
contracting unless the subcontractor was “ union”
or maintained “ a union shop,” or was “ in con­
tractual relations” with the same local union that
was signatory to the prime employer’s agreement.
Illustrative of the language often found in such
provisions are the following:
No work shall be given by any [association] member to
a contractor who is not in contractual relationship with
the union.

*

*

*

A manufacturer who employs contractors shall employ
only contractors who are in contractual relationship with
the New York Joint Board of the Amalgamated Clothing
Workers of America and shall not cause or permit any work
to be performed for him, directly or indirectly, by any
person, partnership, corporation, or contractor who is not
in contractual relationship with the New York Joint
Board . . . .

Other clauses required the subcontractor to have
an agreement with another local of the same
international union, or with the same or another
local of the same international union, depending
upon the location of the plant or the kind of work
to be let.
Two agreements, both outside the metropolitan
area of New York City, recognized that situations
could arise where no union contractors would be
available. Under such circumstances, the use of
nonunion subcontractors was allowed subject to
very detailed limitations and procedures, as in
the following provision:
In the event the employer is unable to obtain the services
of a union contractor, he shall request the union to furnish
one. If the union fails to furnish a union contractor satis­



factory to the employer, the employer may employ any
available contractor satisfactory to him, provided, how­
ever, that said employer shall not have the right to
arbitrarily reject a proposed contractor as unsatisfactory
without good cause.
When a union contractor satisfactory to the employer
[becomes] available, no further work will be delivered to
such nonunion contractor, it being understood that at no
time is an employer obligated to remove any materials
from a nonunion contractor during the process of
production.
Upon notice from the union that a contractor is avail­
able under the provisions of this clause, a manufacturer
shall have 3 weeks to remove all work from a nonunion
contractor.

A basic control mechanism regulating the sub­
contracting system in the apparel industries is the
registration of subcontractors with the union. By
this device, unions in the industry maximize
knowledge of and control over subcontractors
and their operations. The same “ blanketing in”
that the construction industry achieves by con­
tract compliance is provided here by the regis­
tration requirement. The following provision
illustrates the form taken by registration clauses:
No work shall be sent to any contractor or submanu­
facturer unless such contractor or submanufacturer shall
have been registered by the member of the association
with the union.

In a similar vein, agreements were reached with
two subcontractors’ associations requiring mem­
bers to register their prime employers.
Negotiators of several agreements have used the
registration clause to spell out the prime employersubcontractor relationship, including the rights of
subcontractors and their workers. One clause,
for instance, specified the following aspects of the
relationship:
1. The prime contractor must use his registered sub­
contractors to the exclusion of all others.
2. In return, the registered subcontractor will work ex­
clusively for the prime contractor who designated him.
3. Work shall be shared between the inside shop and
the registered subcontractor.
4. Forms registering subcontractors for the first time
must give detailed information on their volume of produc­
tion for the preceding year and on their capacity to
producei
5. If a registered subcontractor goes out of business, his
workers shall be absorbed into the inside shop and into
the shops of the prime employer's other registered con­
tractors.
6. A prime employer may change or add subcontractors
when modifications in his product justify it, subject to the
approval of the industry's impartial chairman.

13

Many provisions required the prime employer
to guarantee the wages (in full or in part) or all
the contract terms for the subcontractor’s em­
ployees. For example:
In all cases where the [employer] has work performed
. . . outside his own shops . . . he hereby assumes full
responsibility for the conditions of such outside shop and
for the payments of wages of the workers employed by
such outside shop, with the same force and effect as if
that shop were owned directly by [him].

*

*

*

The members of the association hereby guarantee the
payment of the wages of the employees of their respective
union contractors and submanufacturers to the extent of
the work performed . . . .
If the contractor shall fail to
pay . . . in full, the liability imposed by this provision
shall not exceed 2 weeks’ wages where employees are paid
weekly and 3 weeks’ wages where the employees are paid
every 2 weeks.

Several other clauses required the prime em­
ployer to pay the subcontractor at least an amount
sufficient to cover “ contract” wages or obligated
him to withhold sufficient money to cover wage
payments:
The members of the association shall pay to the respec­
tive contractors an equitable price sufficient to pay the
workers the piece rates and wages to which they are en­
titled under this contract.

*

*

*

In order to secure the wages of the workers in the shops
of subcontractors, the employers are urged to ascertain
the payroll of the contractors and make sure to withhold
an amount sufficient to cover the payroll of the workers
in the contracting shops.

Many apparel clauses limited management’s
right to subcontract in strike situations. Such
provisions usually specified that the prime em­
ployer could not subcontract to a struck contractor
and that his employees could not work on struck
goods.1 Typically, this clause was phrased thus:
4
The respective members of the association shall not,
directly or indirectly, have any work performed by, or
purchase any of their products from, any other concern
during the pendency of a strike declaied against that
other concern by the International Ladies’ Garment
Workers’ Union or any of its locals.

Several additional clauses safeguarded workers
from disciplinary action in the event they refused
to work on struck goods, declaring such work
to be not “ in the regular course of employment.”
Other provisions recognized that neutral em-*
** See footnote 13.




ployers might be hurt by a rigid application of
the strike prohibition; these allowed goods in a
struck plant to be finished or required substantial
advance notice by the union before a strike in
order to give the neutral employer an opportunity
to make other arrangements.
Other Industries. Among the remaining agree­
ments (other than in construction and apparel)
where conditions were attached to subcontracting
of part of the production process or major activity,
both the preservation of employment opportunities
and the protection of contract standards received
approximately equal attention. Among the con­
ditions which were to be met before subcontracting
was permitted were restrictions concerning lay­
offs, notice to the union, and seniority status,
along with a number of limitations related to
skill and equipment needs and to production con­
siderations. To protect contract standards, the
more common limitations that were found re­
quired subcontractors to have a union contract
and to pay prevailing area wages.
EMPLOYMENT EFFECTS

The largest number of limitations upon sub­
contracting were designed to minimize any
adverse effects upon employment. A number of
agreement provisions, scattered among food,
chemicals, rubber, trucking, communications and
utilities agreements, barred subcontracting if
employees who could do the work were on layoff
or working part time. Most, however, forbade
contracting out if it would result in subsequent
layoffs or part-time work. Such provisions were
more frequent in communications and utilities
agreements, but they were also found among
food, petroleum refining, transportation equip­
ment, and trucking contracts. Illustrating the
latter type are the following examples from a
utility and a telephone agreement, respectively:
It is recognized that the company has the right to have
work done by outside contractors. However, work per­
formed by employees covered by the agreement will not
be contracted out if this will result in the layoff of em­
ployees who normally perform such work.

♦

*

*

The company agrees that it will not contract work out
to other parties which is not customarily contracted out
in a manner that will currently and directly result in a
layoff or part-time work for present employees.

14

Several clauses prohibited subcontracting where
its purpose was to “ reduce available work” or to
reduce the permanent work force:
It is also the intent o f the parties that work presently
being performed by employees covered by this agreement
will not be contracted out in order to displace present
employees.

In a number of others, subcontracting was to be
terminated if, in addition to layoffs or part timing,
it also led to demotions, transfers, reduction in
wage rates or earnings, or evasion of wage
payments.
The subcontracting provisions of a few agree­
ments, all in the telephone industry, made specific
reference to jurisdictional problems. Two such
agreements were with independent unions, and
two others with an AFL-CIO affiliate. Examples
of each are presented, respectively:
As to situations not covered by [specified sections on
subcontracting] of this article, the company agrees to resist
any effort by other labor organizations through jurisdic­
tional claims to take telephone work from its employees
and further agrees to confer upon request with the union
delegates with respect thereto.

*

*

*

Furthermore, in the event of a jurisdictional dispute
between the union and any other labor organization as to
the performance of work of the type presently and regularly
done by the employees in the bargaining unit, the company
will favor the performance of such work by the employees
in the bargaining unit.

Frequently, agreements required management
to notify the union either before or after work
was to be given out. The effectiveness of such
clauses depends on the status of the union in the
establishment rather than on agreement language.
The weaker of these clauses, requiring notice after
work had already left the plant, was noted in a
utility agreement:
The company will advise the union within 10 days after
the execution of any contract falling within this section,
the stated or estimated contract price of which is $1,000
or more, of the name and address of the contractor receiving
such contract.

Slightly stronger in version were several provisions
that obligated management to notify the union of
subcontracting without establishing a time ele­
ment. More strongly worded were a larger
number of clauses that directed management to
notify the union in advance of intended sub­
contracting, thereby allowing the union time to
marshal arguments in favor of expanding in-plant



employment opportunities as against contracting
out.15
In other clauses, union approval was necessary
only if the subcontractor was nonunion, in which
case the union made sure that the subcontractor
was not undercutting contract standards. Simi­
larly, union approval was required in a utilities
agreement only if subcontracting— “ advantageous
to the employer” —would cause layoffs or demo­
tions, but union approval involved only a satis­
factory disposition of the layoff and demotion
issues.
Four agreements, all involving truckdrivers,
were concerned with preserving the seniority status
of the employees. Three motor freight agreements
and one covering drivers and helpers in a lumber
yard contained identical language, prohibiting sub­
contracting where the seniority of regular workers
would be hurt:
The hiring of outside equipment shall not be done in
such a manner as to interfere with or discriminate against
the seniority status of the employer’s employees. . . .

Considerations other than those directly involv­
ing the status of in-plant employees were reflected
in subcontracting clauses. A number of provisions
allowed management to contract out, providing the
necessary skills and equipment, although available
in the plant, were already engaged on other work.
Several other agreements specified that the com­
pany could let out part of the work as long as
certain specialized skills or equipment were needed
and were not available in the plant. Fewer agree­
ments stipulated that all equipment in the plant
had to be in use before management could contract
out. Clauses including this proviso were scattered
among the food, electrical machinery, professional
and scientific equipment, local transit, and motor
freight industries.
Many provisions allowed subcontracting in
emergencies, during peak periods, or to meet sud­
den spurts in demand. In some cases, subcon­
tracting was explicitly recognized as a better
solution than increasing the work force only to
lay off new employees after a few days or weeks.
Although these provisions were dispersed among
a variety of industries, almost half were found
concentrated in the trucking, transit, telephone,
and electric and gas utilities industries, in which
demand for services could not be postponed or
15 See part I, p. 4, for illustrations.

15

met through accumulated inventories. Typical of
the language concerned with “ busy season” or
“ peak load” conditions is the following utilities
clause:

In a similar vein, a few agreements lifted the
limitations on subcontracting if confining the work
to the plant would affect company operations or
efficiency.

The company will continue the policy of hiring con­
tractors when . . . peaks of work would require a tem­
porary increase of the company's forces with subsequent
layoff of such additional forces.

UNION STANDARDS

Similar to the above clauses were those which
turned on considerations of time. Subcontracting
was allowed when work could not be accomplished
“ in the time required,” when work could not “ be
postponed,” or when “ time of delivery” could not
be met. For example, in an electric and gas
utility clause:
It is the policy of the company not to employ outside
contractors for any work ordinarily and customarily done
by its regular employees, and the company agrees that
no such . . . work will be let to outside contractors
except [where] such jobs cannot be done in the time
required for completion by regular employees because of
volume of work. . . .

The largest number of clauses referring to pro­
duction criteria provided that subcontracting
would be unrestricted in emergency situations, as
illustrated in the following utilities and communi­
cations agreements:
Emergency . . . work caused by fire, flood, storm, or
other major difficulty shall not be subject to the provisions
of this [subcontracting] article.
*

*

*

Nothing in [this subcontracting clause] is to be inter­
preted as restricting the right of the company to contract
out any work during an emergency.
(a) Emergency work includes the clearing of trouble
and the accompanying repair of any plant located in the
territory of a connecting company.

Seventeen agreements were concerned with the
savings in cost that would result from subcon­
tracting. Only when having the work done by
in-plant employees would involve “ unreasonable”
costs, or would not be “ competitive,” or “ would
exceed the cost” of subcontracting, or where it
would not be “ advantageous” or “ economical to
do so,” contracting out was permitted, as for
instance in a transportation equipment agreement:
. . . the work shall be performed by employees with
seniority in the bargaining unit; provided, however, that
in the judgment of the corporation . . . (2) the cost of
producing the item in the plant or performing the work
with employees of the corporation is competitive with the
bids submitted by an outside contractor.



The approach used in the construction and
apparel industries in protecting union standards
was similar to that found in 37 agreements which
required subcontractors to be under union con­
tract either with the same local, or another local
of the same international union, or with an A F L CIO affiliate. Twenty-five clauses insisted upon
compliance with the prime employer’s labor agree­
ment. A lesser number attacked the problem of
the prime employer’s deliberate evasion of his
labor contract, or deliberate discrimination against
employees or union members, by forbidding con­
tracting out under such circumstances. A petro­
leum refinery agreement included this clause:
Nothing in this agreement shall limit the right of the
company to contract out work except that such contracting
out will not be done in order to evade any of the terms
of this agreement.

Under the terms of several other agreements,
subcontracting was to terminate if the employer
used it to avoid paying the contract scale or
overtime. A communications industry clause, for
example, barred subcontracting if it was designed
to avoid paying the premium for the sixth day
of work.
A few provisions obligated the employer to see
that a subcontractor provided prevailing area
wages and working conditions or at least minimums equal to those in the prime employer’s
agreement. As in the construction industry, a
number of agreements, largely in local and long
distance hauling, provided for the subcontractor’s
employment of union labor or material.
Again following the example of the construction
industry, the national Industrial Shows Basic
Agreement, involving Actors’ Equity Association,
required that a guarantee of subcontractor com­
pliance with the collective bargaining agreement
be written into the subcontract:
(a) It is hereby understood and agreed that in the event
the producer engages in the production of an Industrial
Show with actors . . . not employed by the producer,
but by an independent contractor, agent, or other em­
ployer, then the producer will, in its contract with such
independent contractor, agent, or other employer, include
the covenant set forth in paragraph (b) hereof . . . .

16
(b) As an integral part of this contract, it is hereby
agreed by (name of independent contractor to be inserted)
that all actors shall be paid the wage scale and be accorded
all the rights and conditions set forth in the Industrial
Shows Basic Agreement in every respect as if the said
(name of independent contractor to be inserted) were
directly a party and signatory to said agreement.

Other provisions created a registration system,
and a small number barred subcontracting where
either the prime employer or the subcontractor
was involved in a labor dispute.
A few agreements contained provisions to main­
tain subcontracting at a certain level or to cut it
back, as in a transportation equipment provision:
It is the intent of this article to insure that the company
shall continue as a manufacturing company; to insure that
it shall conduct its affairs to reflect its purpose to continue
virtually exclusively as a manufacturer of its own pro­
ducts . . .; and to insure that the company shall reduce or
maintain at a minimum the subcontracting or licensing of
work which it can perform . . . .

Two utility agreements carried such curtailment
to its logical next step by calling for its eventual
termination:
The company will study the question of . . . work by
outside contractors on its property and will plan with the
local toward a discontinuance of such work by contractors
over a period of time . . . .

A utility provision required the prime employer
to meet with the union for discussion if at anytime
his employees and those of the subcontractor used
the same “ company-owned manually operated
equipment.” Finally, two transportation agree­
ments gave management a free hand in subcon­
tracting projects the duration of which would be 2
weeks or less, and a local transit agreement allowed
management to subcontract only “ one-time jobs.”

Enforcement of Subcontracting Provisions
Although the dispute settling machinery pro­
vided by most collective bargaining agreements
would normally operate in cases of disputes over
subcontracting clauses, a number of subcontract­
ing provisions, particularly in the apparel industry,
specifically authorized the parties to invoke the
grievance procedure in such disputes. Some of
the apparel agreements repeated in each clause of
the subcontracting section of the agreement that
the parties could refer disputes to the grievance




procedure. Many of the agreements in this in­
dustry, particularly in New York City where the
impartial umpire system is well established, per­
mitted the full grievance procedure to be bypassed
and the case taken up directly with the arbitrator.
In the following clause, however, the arbitrator
receives a dispute only after disagreement between
the employers’ association and the union, and a
time limit is set for his decision.
Should the union object to the employment of such
contractor, no work shall be given by the member of the
association to the contractor until the matter is adjusted
between the representatives of the association and the
representatives of the union. Upon their failure to agree,
the matter shall be disposed of by an impartial arbitrator
not later than 48 hours after the submission of the case to
the arbitrator.

The following transportation equipment provision
allowed the grievance procedure to be used if the
union was not “ satisfied” with management’s
reason for subcontracting:
Where outside contractors are utilized, notification to
that effect and the reason therefor will be furnished the
union. If the union is not satisfied with the reasons given,
the matter may be processed through the grievance
procedure.

Penalties designed to aid enforcement of sub­
contracting clauses were found in a small number
of agreements. These included financial damages
(usually determined by an arbitrator), strike
action, or in one case, injunctive relief. The
largest number, again found predominantly among
apparel clauses, required the payment of damages
when a prime employer used a nonunion subcon­
tractor or when he underpaid his own workers or
his subcontractor (who, in turn, was forced to
underpay his employees), as in a shirt and sports­
wear agreement:
Where it shall have been established that there has been
an underpayment made by a member of the association to
his contractor or submanufacturer or by him to the workers,
the amount of such underpayment shall be paid by such
member of the association to the parties so underpaid, and
he shall, in addition to the foregoing, be subject to such
additional liquidated damages as may be agreed upon be­
tween the association and the Joint Board or, upon their
failure to agree, as may be determined by the impartial
chairman . . . .

Another group, consisting largely of clauses in
construction agreements, provided that violation
of the subcontracting clause was sufficient cause for

17

“ cancellation” or “ termination” of the agreement.
The following is the standard language found
among clauses covering electricians in the con­
struction industry:
Local Union . . . is a part of the International Brother­
hood of Electrical Workers, and any violation or annul­
ment of working rules or agreement of any other local union
of the IBEW or the subletting, assigning, or the transfer of
any work in connection with electrical work to any person,
firm, or corporation not complying with the terms of this
agreement by the employer, will be sufficient cause for
cancellation of this agreement, after the facts have been
determined by the international office of the union.

One agreement in the apparel industry sanctioned
union exercise of an injunctive remedy, as follows:
The employer agrees that he will at no time buy cut
goods for caps or hats to be manufactured on his premises
nor shall he contract any work to any nonunion shop.
Notwithstanding the provisions of paragraph 23, and in
addition to the relief provided in said paragraph, a breach
of this clause shall also entitle the union, in an action at
law or in equity, to judgment for damages for wages lost
by its members, employees of the employer, as well as to
injunctive relief to restrain a further breach of this clause.




A number of provisions, mostly in the construc­
tion and utilities industries, permitted noncompli­
ance with subcontracting provisions under certain
circumstances. Commonly, the union waived
enforcement if the employer, in fulfilling his obliga­
tions under the subcontracting clause, would
violate State or Federal statutes. In a few addi­
tional situations, the clause could be bypassed if
its compliance created economic hardships for the
employer. The following provision from an elec­
trical machinery agreement covered both situa­
tions:
When building or construction work of the type custom­
arily performed by x
the building trades unions of the
A FL -C IO is contracted out, preference shall be given to
qualified contractors employing members of the trade
unions affiliated with the A FL -C IO . Nothing herein
shall require the company to violate Federal, State, or
municipal regulations, to delay the work, to employ a con­
tractor either not readily available or not equipped to do
the work, or to bear unreasonable cost. If faced with such
contingencies, the company shall immediately take the
matter up with a proper representative of the local union.




19
Appendixes
In ord er to illustrate the severa l elem ents of policy relating to subcontracting,
selected clau ses illustrating a variety of situations are reproduced on the follow ing pages.
These should not be con sidered as m odel o r typical p rov ision s.




20
Appendix I.

Subcontracting Construction and Other S erv ices

F ro m the agreem ent between
the Colum bia-Southern C hem ical C orp. ,
and A llied C hem ical and Alkali
W orkers of A m e rica (in d .)

ARTICLE V
R epairs and Construction
Section 1.
When a con tract is let by the com pany fo r any repairs or construction w ork, the c o m ­
pany w ill attempt fa irly to em ploy d irectly, o r , if pra ctica l, through any con tractor as
many idle em ployees as possib le, provided they are qualified for the work available in
making repairs to buildings, tanks, and equipment, o r in building new stru ctu res, and
at rates in no ca se s le ss than the minimum plant rate fo r the type o f work perform ed.
The com pany w ill notify the union as soon as possible of contracts let fo r construction
o r repair w ork, giving the name of the con tra ctor, nature of the w ork, approxim ate
number o f man h ou rs, and reason th e re fo r. The com pany w ill make a sin cere e ffo rt
to notify the union p rior to contracting the w ork.
Section 2.
This clause is not intended to re s tr ict the company in its right to let contracts fo r new
construction o r large repair jobs when it feels it n ecessa ry or expedient to do so, such
as not having the n e ce ssa ry equipment o r supervision fo r such operations. It also applies
to the em ploym ent of skilled artisans from outside its regular plant organization when
it is n e ce ssa ry to do so.
Section 3.
With re sp e ct to skilled trades within the plant, it is understood that if a co n tra cto r^
em ployees work ov ertim e, then, at least an equivalent number of available plant e m ­
ployees of the same skill w ill be perm itted to work overtim e on the same day, except
when special circu m stan ces exist, such as:
(1) Industry practice as regards to B rick Masons provides that overtim e must be w orked.
Exam ple: Silicate furnace tank repair— contractor personnel cannot be obtained unless
they w ork 10 hours a day.
(2) Where the job m ust be worked on a continuous b a s is .
Exam ple: Where welding and annealing pipe lines is involved and must be continued until
job com pletion.




21
F rom the agreem ent between
the Dunlop T ire and Rubber C o r p .,
and the United R ubber, Cork,
Linoleum and P la stic W orkers
of A m e rica (A F L -C IO )

A R T I C L E V III

G eneral Rules

Section 8 .0 9 — Outside C on tractors.
While in general it is the policy and intent of the com pany to have that work perform ed
by its maintenance em ployees which they are able to handle, it is recogn ized by both
parties that at various tim es the com pany may be required to allot to outside con tractors
work o f sim ila r o r identical nature as that perform ed by com pany maintenance em ployees.
Such allotm ent o f con tracts shall be governed by the follow ing:
(a) That the w ork p roject is o f such size or nature as to make it im p ractical to be
handled by the above mentioned em ployees in conjunction with their regular work
assignm ents o r
(b) That the w ork is o f such urgency o r short duration as to make it im practical to
add additional men to the regular maintenance fo r c e .




22
F rom the agreem ent between
The E le ctric Storage Battery C o .,
and the International Union, United
Autom obile, A ir cr a ft and A gricultural
Im plem ent W orkers o f A m e rica (A FL-C IO )

ARTICLE XI
Subcontracting Work

Statement o f com pany’ s position relative to letting maintenance contracts to outside con ­
tr a c to r s.
Maintenance shall include jan itors, yard men and sw eep ers.
The com pany intends to utilize our own personnel and equipment w herever it is fea sib le.
It is anticipated that it w ill be feasible and advantageous in the great m ajority of in­
stan ces. H ow ever, it m ust be recogn ized by everyone that there are som e jobs which
should be let to outside con tra ctors because they may p ossess sp ecia lized equipment
which we do not have, o r which is already being utilized, or where peculiar skills are
involved, o r in ca se s where the time lim its o f the job are such that it cannot be c o m ­
pleted efficien tly within the required time or where the fa cilities o f the com pany do not
have the capacity fo r the project.
It is also the intention of the com pany to inform union representatives of the reasons
why such con tracts are being let to outside co n tra ctors.
C onsideration w ill be given
to facts and arguments presented by union representatives and they w ill be weighed in
making the final d ecision .
A procedure will be established internal to the com pany
organization which should give reasonable assurance that this will be done.
The final decision as to whether the work will be done by our personnel o r by outside
con tra ctors is one which properly is inherent in the com pany function and this should
be recogn ized by all con cern ed.




23
Appendix II.

A.

Subcontracting P roduction P r o c e s s e s or the M ajor A ctivity

Construction Industry

F rom the agreem ent between
The A ssocia ted G eneral C ontractors of
A m erica , Southern C aliforn ia Chapter
and the United B rotherhood of Carpenters
and Joiners o f A m erica (A FL-C IO )

ARTICLE I
C overage

B.

A ll work perform ed in the C on tra ctors' w arehouses, shops or yards which have been
particularly provided or set up to handle work in connection with a job or p roject
cov ered by the term s of this agreem ent, and all of the production o r fabrication of
m aterials by the C on tractor, o r su bcontractor, for use on the p roject shall be sub­
je c t to the term s and conditions of this agreem ent.

C.

A ll work p erform ed by the C on tractors, and all se rv ice s rendered fo r the C on trac­
to rs, as herein defined, shall be rendered in accordance with each and all of the
term s and provisions h ereof.

D.

If the C on tractors, parties h ereto, shall subcontract jo b -s ite work cov ered under
the ju risd iction o f the United B rotherhood of Carpenters and Joiners of A m erica ,
cov ered by this agreem ent, including the furnishing or installation of m aterials,
perform ance of labor, and the operation o f equipment, provision shall be made in
writing for the observance by these subcontractors with the full term s of this a g re e ­
ment.
The C ontractors agree to be held liable fo r the com pliance by these sub­
con tra ctors with this agreem ent.
A subcontractor shall be defined as a person, firm or corporation , party to this
agreem ent, who em ploys available workm en to perform , as em ployees, se rv ice s
cov ered by the term s and provisions of this agreem ent.

E.

The C ontractors and their subcontractors shall have freed om of ch oice in the pur­
chase o f m a teria ls, except that every reasonable effort shall be made by C ontractors
and their su bcontractors to refrain from the use of m aterials, which use will tend
to cause any d iscord o r disturbance on the p roject.
E m ployees shall not be r e ­
quired to handle nonunion m aterial.

F.

R epairs n ecessitated by defects of m aterial or workmanship or adjustments o f newly
purchased a n d /or installed equipment or m achinery will not be subject to this a g ree­
ment when such repairs a n d /or adjustments are made by the m anufacturer thereof
o r his agents o r em ployees pursuant to the term s of a m anufacturer's guarantee and
the union w ill not ham per such m anufacturer or his agents or em ployees on such
exem pted w ork.




24
F rom the agreem ent between
the M ason C o n tra cto rs1 A ssocia tion , In c .,
and the M etropolitan Executive Com m ittee
of B rick la y ers (AFL-CIO )

ARTICLE IX
Subcontracting
Section 1.
A su bcontractor is defined as any person, firm or corp oration , which agrees ora lly or
in writing to perform fo r o r on behalf of an em ployer any part or portion o f the work
co v e re d in this agreem ent.
Section 2.
The Joint A rbitration B oard shall com pile and publish a lis t o f responsible subcontrac­
to rs.
The Board shall revise the list p eriod ically and may add to, o r delete fro m ,
the list in its d iscretion in accordance with uniform rules and standards established
by the B oard.
Section 3.
In the event an em ployer elects to subcontract any work cov ered by this agreem ent to
a subcontractor who does not appear on the lis t published by the Joint A rbitration Board
such em ployer shall:
(a) P rovide in the subcontract fo r com pliance by the subcontractor with the term s and
conditions o f this agreem ent;
(b) Rem ain respon sible
su b con tra ctor.

at all tim es for full com pliance with the agreem ent by such

ARTICLE XIII
Contracting
Section 3.
No m em ber o f the unions o f the m etropolitan area shall be allow ed to subcontract work
of any ch a ra cter, co v e re d by our cla ssifica tion of work, or work fo r any person co n ­
tracting w ork by the thousands, o r lump work of any character taken from general co n ­
tra ctors without furnishing m a teria ls.




25
B.

A pparel Industry

F rom the agreem ent between
The Clothing M anufacturers A ssocia tion
of the United States of A m erica , and the
Am algam ated Clothing W orkers o f A m erica (AFL-CIO )

ARTICLE XIV
Other F a ctories and C ontractors
(a) During the term o f this agreem ent the em ployer agrees that he shall not, without
the consent o f the union, rem ove or cause to be rem oved his present plant or plants
fro m the city or citie s in which such plant or plants are located.
(b) During the term o f this agreem ent the em ployer may with the consent o f the union
manufacture garm ents o r cause them to be manufactured in a fa ctory other than
his present fa ctory or fa ctories provided his factory o r fa ctories have and continue
to have full em ploym ent and provided further that such other factory or factories
are under con tract with the union.
(c) The em ployer further agrees that he shall send work only to such union con tractors
designated by agreem ent of the parties herein.
The em ployer em ploying con tractors
a grees sim ultaneously with the execution of this agreem ent to execute a contractor
registration statement, the term s and conditions o f which shall be sp ecifica lly in ­
corp ora ted herein by re fe re n ce .




26
F rom the agreem ent between
The Industrial Council of Cloak, Suit
and Skirt M anufacturers, I n c ., and the
International Ladies* Garm ent W orkers*
Union (A F L -C IO )

FIFTH: The C ouncil agrees that all of its m em bers who produce all o r part o f their
garm ents on their own prem ises w ill maintain union shops, and that all of its
m em bers who have their garments produced by con tractors or subm anufacturers
o r who purchase their garments from other m anufacturers, m erchants, job b ers
or w h olesa lers, w ill deal only with such firm s as conduct union shops.
No
m em ber of the C ouncil, how ever, shall purchase any garments w hatsoever
co v e re d by this agreem ent, unless his inside shop, if he maintains one, and
the shops of the regularly designated con tractors and subm anufacturers are
fully supplied with w ork, and no such purchase shall be made unless the same
is bona fide and genuine or if the purpose o f such purchase is to avoid any of
the obligations herein provided for to the w orkers of the inside shop of the
m em ber of the Council and of his regularly designated con tra ctors and subm an u factu rers.
The union shall have the right to have its representative v isit the shops of the
m em bers o f the Council at all tim es, for the purpose of examining the union
standing o f the w ork ers, which examination shall not involve the loss of w ork ­
tim e.
A ll such examinations shall be had on notice to the Council which shall,
in each instance, designate a representative to accom pany the union re p re se n ­
tative on such exam ination.
No m em ber o f the Council shall, directly or indirectly, manufacture or cause
any garm ents to be m anufactured or purchase any garments from any person,
firm or corporation against whom the International or the union has declared
o r sanctioned a strike until such strike in each case has been fully settled.
No w orker shall be requ ired to perform any work for any em ployer whether
a m em ber or nonm em ber of the Council during the pendency of a strike declared
o r sanctioned against such em ployer by the International or by the union.
P er­
form ance o f such work shall not be deem ed in the regular cou rse of the worker* s
em ploym ent and refusal to perform such work shall not be deem ed a breach
o f this agreem ent.
SIXTH:

(a) The parties hereto agree that the union has a bona fide interest in the labor
conditions existing in all shops manufacturing la d ies*, m is s e s * , children*s
and infants* cloa k s, coats, suits, skirts and all sp ecial types and kinds of
such garm ents, and that a close unity of in terest exists among the m em bers
o f the International engaged in the work of manufacturing such garments
reg a rd less of the resp ective shops in which they are em ployed.
(b)




The parties hereto acknowledge that under prevailing p ractices in the coat
and suit industry, m anufacturers, jo b b e rs , m erchants o r w h olesalers cause
garments to be m anufactured o r work to be p erform ed fo r them or oth er­
w ise deal (usually by the "s a le " of cut o r uncut m aterials and the "re p u r­
ch a se " of com pleted garments manufactured fro m such m aterials) by or
with other individuals, firm s or corporations com m only re fe rre d to as
"c o n tr a c to r s " a n d /or "su bm a n u fa ctu rers." In all c a s e s , these m anufac­
tu rers, jo b b e rs, m erchants or w holesalers provide the designs, s p e c ific a ­
tions, m aterials and other item s pursuant to which their garments are
manufactured" by their con tractors and subm anufacturers.
The parties
h ereto acknowledge that each m em ber of the Council and his con tractors
and subm anufacturers who manufacture garments or p erform work fo r him
o r with whom he otherwise deals are clo s e ly allied and have a clo se unity
o f in terest with each other in the manufacture of such garm ents, and that,
in any labor dispute, to the extent of any work perform ed on such garm ents,
a m em ber of the Council and his con tractors and subm anufacturers are not
"n eu trals" with resp ect to each other but are jointly engaged in an inte­
grated production effort.

27
F rom the agreem ent between
The Industrial C ouncil of Cloak, Suit
and Skirt M anufacturers, I n c ., and the
International Ladies* Garment W o rk e rs’
Union (A F L -C IO )— Continued

Nothing contained in this number Paragraph "SIXTH (b)" shall be deem ed
to crea te or enlarge any existing obligation to the w orkers em ployed in
shop o f any con tractor or sub m anufacturer.
Nor shall it be interpreted
as making any m em ber o f the Council resp on sible fo r any of the acts of
his con tra ctors o r subm anufacturers, except to the extent ex p ressly im ­
posed by other paragraphs o f this agreem ent.
SEVENTH: (a)

E very m em ber of the Council who em ploys o r deals with contractors
o r subm anufacturers shall confine his production to his inside shop and
to the con tra ctors o r subm anufacturers h eretofore designated by him
the w ork ers th ereof. He shall distribute his work equitably to and among
his inside shop and his con tractors or subm anufacturers, with due r e ­
gard to the ability of the con tra ctors, submanufacturers and the w orkers
to produce and p erform .
Any firm which b ecom es a m em ber o f the
Council after the date of the signing of this agreem ent, shall designate
its con tra ctors and subm anufacturers, if it em ploys or deals with them,
on the follow ing b a sis: (l) The volume of such fir m ’s production for
the preceding year; (2) the capacity of the designated con tractors or
subm anufacturers to produce.
If such firm has not th eretofore been in
bu sin ess, it shall designate the number of co n tra ctors, if any, which it
w ill actually requ ire.

(b)

Should a con tractor or sub manufacturer designated by a m em ber o f the
C ouncil abandon his designation or cease to operate his bu sin ess, through
collu sion , or by arrangem ent with such m em ber, o r should the d e sig ­
nation o f such con tractor or submanufacturer be can celled or annulled
by the Im partial Chairman, the w orkers of such con tractor or sub­
m anufacturer shall im m ediately be absorbed either by the inside shop
o f the m em ber, if he maintains one, or by the remaining designated
con tra ctors or subm anufacturers of such m em ber.
In any other case
where a con tractor o r submanufacturer of such m em ber abandons his
designation or cea ses to operate his bu sin ess, the Im partial Chairman
shall make such determ ination with resp ect to the w orkers of the co n ­
tra ctor or subm anufacturer as the m erits o f each particular case w ar­
rants, and, if absorption shall be directed, the same shall not be beyond
the existing fa cilitie s of the inside shop of the m em ber o f the Council,
if he maintains one, and of his regularly designated con tractors and
subm anufacturers.

(c)

No m em ber o f the Council shall designate con tra ctors or submanufac­
turers unless he operates a union shop as herein defined and can fully
supply his inside shop with work.

(d)

No m em ber o f the Council shall em ploy cutters or maintain any cutting
fa cilitie s whatsoever on his prem ises, or send out cut goods to co n ­
tr a c to r s, unless he operates an inside shop.

(e)

If the m em ber making such designation shall, at any tim e, change the
ch aracter of his product and the con tractors or subm anufacturers d esig ­
nated by him or any of them shall be incapable of meeting his changed
requirem ents, he shall have the right to substitute an d /or add such other
con tra ctors or subm anufacturers in place of those incapable of meeting
his changed requirem ents.
Such substitution a n d /or addition shall not
be made until after the decision of the Im partial Chairman on notice
and hearing within 48 h ou rs.




28
F rom the agreem ent between
The Industrial Council of Cloak, Suit
and Skirt M anufacturers, I n c ., and the
International L a d ie s 1 Garment W orkers*
Union (A F L -C IO )— Continued
(f)

A con tractor or submanufacturer shall work ex clu siv ely fo r the m em ber
o f the Council so designating him , unless otherw ise approved by the
C ouncil, the A m erican Cloak and Suit M anufacturers* A ssocia tion , I n c .,
and the Union, o r the Impartial Chairm an. A con tractor or submanu­
factu rer thus designated shall not distribute or sell directly o r indirectly
any m erchandise to any other m anufacturer, m erchant, jo b b e r, whole­
sa le r, reta iler o r consum er.

(g)

A m em ber o f the Council whose garments are made by con tra ctors or
subm anufacturers shall pay to such con tractors o r subm anufacturers at
lea st an amount sufficient to enable the con tractor or subm anufacturer
to pay to the w orkers the wages and earnings provided fo r in this a g re e ­
m ent, and, in addition, a reasonable payment to the con tra ctor or sub­
m anufacturer to co v e r his overhead.

(h)

Where it shall be established that there has been an underpayment made
by a m em ber o f the Council to the con tractor o r sub m anufacturer o r the
w ork ers, the amount of such underpayment shall be paid by such m em ber
o f the Council to the parties so underpaid and he shall, in addition to
the foregoin g, be subject to such additional liquidated dam ages as may
be agreed upon between the Council and the union, o r , upon their failure
to a gree, as may be determ ined by the Im partial Chairman.

(i)

Each m em ber of the Council shall be responsible to the w ork ers in each
o f the crafts cov ered by this agreem ent for the payment of their wages
fo r work done by them on garments of such C ouncil m em ber made by
con tra ctors or subm anufacturers, provided that such liability shall be
lim ited to wages fo r 10 full working days in ev ery instance. H ow ever,
if the m em ber o f the Council fails to make payment to the con tractor
or subm anufacturer on or before Tuesday follow ing the week in which
the w ork was perform ed, the liability of the m em ber of the Council h e r e ­
under shall be deem ed extended beyond the 10 working days and shall
continue fo r 1 day for each additional day fo r which such w ork ers have
not- been paid their wages by reason of the nonpayment thereof by the
m em ber of the Council to his con tractors or subm anufacturers.
Notice
o f default by the con tractor or subm anufacturer in payment of wages
due the w orkers shall be given by the union to such Council m em ber
within 10 days after the firs t default.

NINTH: The Council, on its own m otion, w ill investigate any or all of the books and
r e co rd s o f its m em bers to ascertain whether they are giving work to or dealing
with nonunion or nondesignated shops.
Upon com plaint filed by the union, the
privilege w ill also be a ccorded a representative o f the union to accom pany a
representative of the Council to examine the books and re co rd s of the m em ber
against whom a com plaint has been filed , fo r the purpose only of determining
whether such m em ber is giving work to nonunion o r nondesignated shops.
Such
examination shall be undertaken within 48 hours from the receip t of the request,
and shall be conducted under such conditions and lim itations as may be p re ­
scrib ed by the Im partial Chairman hereinafter designated.
Upon the request of the union, the Im partial Chairman or his accountants shall
examine the books of any designated Council m em ber for the purpose of a s c e r ­
taining whether the provisions of this agreem ent are fully com plied with.
The
Im partial Chairman, upon his own m otion, may make the aforem entioned
investigation.
A uniform set of books and re co rd s relating to payrolls, labor cost and outside
production shall be adopted by all m em bers o f the Council and by the entire
industry.
The form o f such record s and books shall be p rescrib ed by the
Im partial Chairm an. Such record s and books shall be open to the examination
o f the Im partial Chairman or his accountants at all reasonable tim es.




29
F rom the agreem ent between
The Industrial Council of Cloak, Suit
and Skirt M anufacturers, I n c ., and the
International L a d ies' Garment W ork ers'
Union (A FL-C IO )—-Continued
TENTH: F o r the purpose of carryin g the provision s of the above article into effect, the
union shall im m ediately submit to the Council a lis t of all union shops which are
operating under contracts with it and shall at lea st once in every week notify
the Council o f all changes in and additions to the lis t.
No m em ber o f the C ouncil shall em ploy an d /or designate, o r continue the em ploy
a n d /or designation of, a con tractor or submanufacturer whose name is not in­
cluded in the latest c o r r e c te d lis t of "union sh op s" furnished by the union, and
shall not ord e r o r purchase garments or otherw ise deal or continue dealing
with a m anufacturer, m erchant, jobber or w holesaler whose name is not included
in such list. Any ord e r or purchase of garments or other dealings, as aforesaid,
shall be subject, how ever, to the further restriction s contained in Paragraph
"F IF T H " h ereof.
Whenever it shall appear that a m em ber of the Council gives work to or deals
with a nonunion shop a n d /or a nondesignated con tractor or subm anufacturer,
the Council shall im m ediately d irect him to withdraw his work from such non­
union shop a n d /or nondesignated con tractor or submanufacturer and to discontinue
dealing with it, whether such w ork be in p rocess of operation or otherw ise.
Should a m em ber o f the Council be
found giving work
to or dealing with a non­
designated con tractor or subm anufacturer, the Council and the union shall agree
upon the amount o f damages which the m em ber o f the Council shall pay for a
fir s t offen se, which sum shall be sufficiently high
(a) to offse t any advantage gained by the m em ber through such transaction,
giving due regard to the amount involved;
(b)

to pay the costs

o f any investigations

made in connection therewith.

In the event o f the inability o f the Council and the union to agree upon the
amount of dam ages, the same shall
be determ ined by
the Im partial Chairman.
Should a m em ber o f the Council be
found giving work
to or dealing with a non­
union con tra ctor o r subm anufacturer, or fo r the second or any subsequent time
be found giving w ork to or dealing with a nondesignated con tractor or submanu­
fa ctu rer, the Council and the union shall agree upon the amount of damages
which the m em ber o f the Council shall pay, which sum shall be sufficiently high
(a)

to offset any advantage gained by the m em ber through such transaction,
giving due regard to the amount involved, and upon which any amount
paid under " ( c )" h ereof shall be credited on account;

(b)

to pay the costs

(c)

to rem unerate the w orkers of the inside shop of the m em ber of the Coun­
c il, if he maintains one, and the w orkers o f his regularly designated
con tra ctors o r subm anufacturers who have sustained damages by reason
o f the above violations.

of any investigations

made in connection therewith;

In the event o f the inability o f the Council and the union to agree upon the
amount of dam ages, or whether any damages have been sustained by the w ork­
e r s , the same shall be determ ined by the Impartial Chairman.
In such ca se s where a m em ber o f the Council is found giving work to or dealing
with a nonunion con tractor or sub m anufacturer, he shall pay the full amount
o f wages lo st by the w orkers by reason of such violation.
Claim s fo r damages to rem unerate w orkers which the union may have against
any m em ber o f the Council who gives work to or deals with nondesignated co n ­
tra ctors o r subm anufacturers shall be filed with the Council any time within
6 months after such dealings, unless the same shall have been con cealed, in
which event no such lim itation shall apply.




30
F rom the agreem ent between
The Industrial C ouncil of Cloak, Suit
and Skirt M anufacturers, I n c ., and the
International Ladies* Garment W o rk e rs’
Union (A F L -C IO )— Continued

In addition to being requ ired to pay the amounts herein sp ecified , a m em ber,
who shall be twice found to have given w ork to or dealt with either a nonunion
o r nondesignated con tra ctor or submanufacturer during the term of this a g re e ­
ment, may be expelled by the Council. Such a m em ber shall likew ise auto­
m atically lose all rights and privileges under this agreem ent to the extent of
giving the union the right to take such action as it may deem n e ce ssa ry , includ­
ing the right to strike against such m em ber, to en force observance of this
Paragraph number "TENTH. "
The Council may adopt such other m easures as in its judgment are n ecessa ry
and expedient to prevent its m em bers fro m giving work to nonunion o r non­
designated con tra ctors o r subm anufacturers.
R ecognizing the difficulty of ascertainm ent o f the amounts prop erly payable under
subdivisions "(a )" and "(b )" of this Paragraph num bered "TE N TH ", the sums
determ ined to be payable hereunder shall fo r all purposes be deem ed liquidated
damage s .
A ll amounts paid shall be turned over to the Im partial Chairman towards d e­
fraying the expenses o f his o ffice , except such amounts as are a ss e sse d and
co lle cte d to rem unerate the w orkers who have sustained dam ages which sums
shall be turned ov er to the union and such amounts as are a sse sse d and co lle cte d
in favor of the R etirem ent Fund and fo r the Health and W elfare Fund, which
sums shall be turned over to the resp ective Fund.
The C ouncil in no event shall be deem ed the guarantor or surety of a defaulting
m em b er, and the failure of any individual m em ber or m em bers to pay the
amounts herein a sse sse d shall not be deem ed a breach of this agreem ent by
the C ouncil o r any of its nondefaulting m em bers.
TWENTY-SEVENTH: No work shall be given to w orkers to be made at home and all
hom ew ork of any kind is ex p ressly prohibited.
TWENTY-EIGHTH: No contracting or subcontracting within the shop shall be perm itted.
THIRTY-SIXTH: The m em bers o f the A m erican Cloak and Suit M anufacturers * A s s o c ia ­
tion, Inc. , are recogn ized in this industry to be the efficien t and standard shops
capable of assisting and stabilizing the industry and eliminating the s o -c a lle d
sweat shop evil.
A ccordin gly, the parties h ereto agree that m em bers o f the
Council w ill confine the manufacture of m erchandise made for them in con tra ct­
ing o r submanufacturing shops to m em bers o f the A m erican A ssociation e x clu ­
siv ely .
And the m em bers of the A m erican A ssociation undertake to give p re f­
eren ce to m em bers o f the Merchants Ladies* Garment A ssociation , I n c .,
m em bers o f the Industrial Council o f Cloak, Suit and Skirt M anufacturers,
I n c ., and m em bers of the Infants* and Children’ s Coat A ssociation , Inc.
The above obligation is assum ed by the Council upon the understanding that
the A m erican A ssocia tion is an organization of con tra ctors and subm anufacturers
as defined in this agreem ent.
It shall not be binding upon the said Council if
the m em bership o f the A m erican A ssociation shall contain inside m anufacturers
producing garments fo r the m arket on their own account substantially in the
sam e manner as m em bers of the Council.
THIRTY-EIGHTH: Each m em ber of the Council shall file weekly with the Impartial
Chairman a c o r r e c t copy o f the ord ers for garments placed with his con tra cto rs,
a n d /or subm anufacturers, and the labor p rice settled on such garm ents.
The
same shall be available to the union and all parties under co lle ctiv e agreem ent

with it.


31
C.

Other Industries

F rom the agreem ent between
The W illys M otors, I n c ., and the
International Union, United A utom obile,
A ircra ft and A gricu ltu ral Implement
W orkers o f A m e rica (AFL.-CIO)

Outside W ork
P a r.

112 (a) The com pany d e sire s to provide steady em ploym ent fo r as many em ployees
as practicable in their Toledo plant.
To accom plish that end, it w ill
continue to keep all the w ork it is now doing in the Toledo plant and before
a con tract is signed to take any of the work out o f the plant that is now
being done in the plant, the com pany will submit to the Executive Shop
C om m ittee, in writing, the data coverin g the reasons fo r this action.
(b)

A fter the Com m ittee has analyzed this inform ation and everything being
equal, they w ill either m eet these p rices or rep ort their decision to a
m eeting o f the em ployees and after securing the em ployees* approval,
the com pany w ill have the prerogative to contract fo r the work to be
perform ed outside of the plant.

(c)

If the basis o f moving such work is equipment and not the co st of running
the operation, the com pany w ill make every effort to secure the m achinery
and keep the work in the plant
Failing to secu re such needed equipment,
whenever the com pany b ecom es in a financial condition to do so, the same
issue may be again brought up for negotiations, and it w ill attempt to bring
in w ork that is now being done on the outside whenever this is practicable
at a com parable or le s s e r c o st, it being understood that the c o s t of addi­
tional m achinery must be am ortized by the savings effected in the manu­
facture o f a reasonable number of the Units that we can expect to manu­
facture .

(d)

It is also understood that when a patented a rticle that cannot be made in
the com pany’ s plant is found to effect savings or be m ore desirable in ad­
vancing the sale o f the product than the article manufactured in the C om ­
pany’ s plant, the patented a rticle will be procu red after com plying with the
fir s t two section s of this paragraph.







33
Appendix III. Subcontracting Both P roduction P r o c e s s e s
o r the M ajor A ctivity and Construction
and Other Services

F rom the agreem ent between
The Sinclair Refining C o. ,
and the O il, Chem ical and Atom ic
W orkers International Union (A FL-C IO )

ARTICLE XXIV
C ontract Work
1.

On pipe lin es, in production and in gasoline plants, it is agreed that any cla ssified
work cu stom arily p erform ed by em ployees of the em ployer, fo r the perform ance of
which equipment and present o r la id -o ff em ployees are available, shall not be con ­
tracted out.
Whenever new production is being developed, roustabout and w ell-pulling
work shall be p erform ed by em ployees of the em ployer.

2.

In re fin e rie s, it is agreed that any c la ssifie d work cu stom arily p erform ed by e m ­
ployees o f the em ployer shall not be contracted out as long as the em ployer has the
n ecessa ry equipment and so long as there are qualified em ployees available from
among present or la id -o ff em p loy ees.
This, how ever, shall not apply to m ajor
construction job s o r to the installation or construction of special or patented equip­
ment not ordin arily installed by the em ployer.
The em ployer in such ca ses will
advise con tra ctors when qualified em ployees are available fo r work on these special
in stalla tion s.

3.

E m ployees granted leaves o f absence to work fo r a con tractor perform ing se rv ice s
for the em ployer shall retain their seniority on the same basis as though they had
continued to work fo r the em ployer.




* U .S. G O V E R N M E N T P R IN T IN G O F F IC E : 1961 0 — 607810




Recent BLS Industrial Relations Studies
Title
Ball. No.

Agreement Provisions

Price

1282

Paid Sick Leave Provisions in Major Union Contracts, 1959.

30 cents

1279

Rest Periods, Washup, Work Clothing, and Military Leave Provisions in Major
Union Contracts.

30 cents

1272

Union Security and Checkoff Provisions in Major Union Contracts, 1958-59.

20 cents

1266

Collective Bargaining Clauses: Company Pay for Time Spent on Union Business.
October 1959.

35 cents

1251

Premium Pay for Night, Weekend, and Overtime Work in Major Union Contracts, 1958.

30 cents

1248

Paid Holiday Provisions in Major Union Contracts, 1958.

25 cents

1233

Paid Vacation Provisions in Major Union Contracts, 1957.

30 cents

1216

Collective Bargaining Clauses: Dismissal Pay. August 1957.

25 cents

1209

Analysis of Layoff, Recall, and Work-Sharing Procedures in Union Contracts.
March 1957.

30 cents

Employee-Benefit Plans
1296

Health and Insurance Plans Under Collective Bargaining:
Life Insurance and Accidental Death and Dismemberment Benefits,
Early Summer I960.

25 cents

1293

Health and Insurance Plans Under Collective Bargaining:
Major Medical Expense Benefits, Fall I960.

20 cents

1284

Pension Plans Under Collective Bargaining:
Normal Retirement, and Early and Disability Retirement, Fall 1959.

40 cents

1280

Health and Insurance Plans Under Collective Bargaining:
Surgical and Medical Benefits, Late Summer 1959.

30 cents

1274

Health and Insurance Plans Under Collective Bargaining:
Hospital Benefits, Early 1959.

30 cents

1259

Pension Plans Under Collective Bargaining:
Part I. Vesting Provisions and Requirements for Early Retirement
Part II. Involuntary Retirement Provisions, Late 1958.

25 cents

1250

Health and Insurance Plans Under Collective Bargaining:
Accident and Sickness Benefits, Fall 1958.

25 cents

1236

Digest of One Hundred Selected Health and Insurance Plans Under Collective
Bargaining, Early 1958.

$1.25

1232

Digest of One Hundred Selected Pension Plans Under Collective Bargaining,
Winter 1957-58.

45 cents

Union Activities
1267

Directory of National and International Labor Unions in the United States, 1959*

45 cents

1263

Union Constitution Provisions: Trusteeship. November 1959*

30 cents

1239

Union Constitution Provisions: Election and Tenure of National and International
Union Officers, 1958.

30 cents

Work Stoppages
1278

40 cents

Analysis of Work Stoppages, 1959*
General

1225
1225-1
1225-2

A Guide to Labor-Management Relations in the United States. April 1958.
Supplement No. 1. November 1958.
Supplement No. 2. July 1959.
(Punched for standard binders.)




$2.00

45 cents
45 cents


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102