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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