Non-Compete agreements between an employer and its bargaining unit employees are a mandatory subject of bargaining. However, employers do not need to bargain with the union representing those employees before signing agreements with third party companies to not hire the employer’s bargaining unit employees.
In Duke Energy Indiana, the union represented the employer’s linemen who constructed and maintained the employer’s powerlines. The employer also used subcontracted linemen. The union represented many of the linemen working for the subcontractors. Many of the employer’s linemen found that working for the subcontractors through the union’s hiring hall offered better wages and benefits, and thus terminated their employment and began working through the hiring hall for the subcontractors. Looking to stop this, the employer began enforcing contractual provisions in the agreements with its subcontractors prohibiting the subcontractor from soliciting the employer’s linemen. In response, the union filed an unfair labor practice charge alleging that the employer had an obligation to bargain over the implementation and enforcement of the non-solicitation provision in the agreements with the subcontractors.
The National Labor Relations Board’s Division of Advice determined:
“Congress had no expectation that the elected union representative would become an equal partner in the running of the business enterprise in which the union’s members are employed. An employer must be free from the constraints of the bargaining process to the extent essential for the running of a profitable business. Thus, the board has recognized that managerial decisions that may impact employees but concern issues that ‘lie at the core of entrepreneurial control’ are not mandatory subjects of bargaining and fall solely within the employer’s prerogative.”
An employer’s decision to include limitations on its third-party contractor’s ability to hire its employees is the type of managerial decision over which the employer does not have to bargain.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.