Collective Bargaining -- Reserved Rights

Prior to collective bargaining, the only restrictions imposed on managerial authority were those emanating from statutes such as minimum wage and maximum hour laws. It stands to reason that the advent of collective bargaining would result in an effort by unions to modify those previously exclusive prerogatives. It is not unionization itself or even the requirement of collective bargaining that results in the employer's surrender of its previously comprehensive authority. Rather, it is the employer's effort to seek agreement that leads to the voluntary surrender of certain managerial rights.

Through the process of collective bargaining, the union seeks to secure improved benefits to be codified in the parties' agreement. To the extent the union is successful in its efforts to accomplish such things as improvement of wages and holidays, and reduction of hours of work and mandatory overtime assignments, the company agrees to surrender its control over such matters and to specify in the labor agreement how much of that authority it is willing to surrender.

To the extent the parties specifically agree to certain employee benefits, the contract seeks to set standards of operation for the life of the agreement. But there are a multitude of subjects that, while potentially ripe for specific consideration in the parties' agreement, are not incorporated and that, indeed, do not even come up for discussion during negotiations.

The question arises as to where the authority resides over those matters not specifically negotiated by the parties. One view holds that prior to collective bargaining there is a tabula rasa, with neither the employer nor the union possessing any nonnegotiated rights. The more prevalent view is that those rights not specifically negotiated away from management by the union remain unfettered and within the control of the employer. This view is termed the "residual" or "reserved rights" theory and endorses the employer's right to operate the enterprise in the same manner as prior collective bargaining, except as restricted by the language of the negotiated contract provision.

Therefore, the employer is deemed to have retained those rights not contracted away and the burden is on the union to establish that a management right has been surrendered rather than upon the employer to spell out such retained rights in the contract, or otherwise prove that they have been retained. The significance is this is that the employer need not take the initiative in identifying rights in the contract language. The employer's reserved or retained rights are considered to exist even though the employer does not insist on listing them in the collective bargaining agreement.

Rights associated with determining the product, price, methods of operation, hiring and supervision of personnel, and rule making are matters uniquely within the province of the employer and rarely subject to negotiation. These and related matters are inherent managerial rights that accrue to the employer whether or not specified in the agreement. An employer may decline to spell out its managerial rights in a contract for fear that securing the union's acquiescence to them might be viewed by arbitrators as an implication that the company was unable to secure agreement, or did not even assert its rights to the others, thus barring it from asserting any other, nonenumerated rights.

To make clear to the union that the employer is retaining its unsurrendered rights, and to forestall disputes that may arise over silence on a particular topic, employers usually secure union acquiescence to certain managerial language in the parties' agreement. A management rights clause may strengthen the company's claim that it possesses a certain authority, but the absence of such a clause will not, itself, force the conclusion that such authority is lacking. Such language may be in the form of a blanket retention or the agreement may contain more specific language.

The extent to which employees' rights are successfully carved from the original block of management prerogatives varies with the issue, the contract language, and perhaps the intent of the parties as reflected in their negotiating history. To the extent there may be a difference of opinion on the issue, it may also be subject to interpretation by an arbitrator.

In some areas, the union has a strong burden of showing that it extracted certain specified rights from the employer. In other cases, the specific rights, although not listed in the contract, may be reasonably implied from the grant of more general rights such as seniority, the union recognition clause, or the grievance procedure itself.

Copyright 2008 LexisNexis, a division of Reed Elsevier Inc.