Collective Bargaining Definition

United States Postage Stamp
Cancelled Stamp From The United States: Collective Bargaining. KingWu / Getty Images

Collective bargaining is an organized labor process through which employees negotiate with their employers to resolve workplace problems and disputes. During collective bargaining, the concerns and demands of the employees are usually presented by their union representatives. Agreements reached through the bargaining process typically establish terms of employment such as wages and hours, benefits, worker health and safety, training, and the grievance resolution processes. Contracts resulting from these negotiations are often referred to as a “collective bargaining agreement,” or CBA. 

Key Takeaways: Collective Bargaining

  • Collective bargaining is a function of unionized labor by which workers negotiate with their employers to resolve problems and disputes that could otherwise result in strikes or work-stoppages
  • Issues involved in collective bargaining often include wages, benefits, and working conditions
  • The result of collective bargaining negotiations is a mutually binding contract or Collective Bargaining Agreement or CBA

Brief History of Collective Bargaining in America

The American Industrial Revolution of the 1800s spurred the growth of the unionized labor movement. Founded by Samuel Gompers in 1886, the American Federation of Labor (AFL) gave many workers bargaining powers. In 1926, President Calvin Coolidge signed the Railway Labor Act formally requiring employers to bargain with unions as a way of avoiding economy-crippling strikes.

A product of the Great Depression, the National Labor Relations Act of 1935 made it illegal for employers to deny workers the right to form new unions or to join existing unions.

The National Labor Relations Act

The National Labor Relations Act (NLRA) prohibits employers from preventing employees from forming or joining unions and from retaliating against employees for taking part in union activities. The NLRA bans so-called “closed shop” arrangements under which employers require all employees to join a certain union as a condition of their employment. While government workers, farm workers, and independent contractors are not covered by the NLRA, several states give state and local government workers and farm workers the right to unionize.

The Collective Bargaining Process

When issues in terms of employment arise, the NLRA requires the unions (labor) and the employers (management) to bargain “in good faith” on the issues involved until they either agree on a contract or reach a mutually-agreed stand-off, known as an “impasse.” In the event of an impasse, employers can impose conditions of employment as long as they had previously been offered to the employees before the impasse was reached. In either case, the result is often the prevention of a strike. Contracts agreed to through collective bargaining are mutually binding and, except under extraordinary circumstances, neither side may deviate from the contract’s terms without the consent of the other party.

When legal problems arise during collective bargaining sessions, they are resolved by the National Labor Relations Board (NLRB), the independent federal agency assigned to deal with organized labor disputes and to protect the rights of employees by enforcing the NLRA.

What Does ‘In Good Faith’ Mean?

The NLRA requires both employers and employees to bargain “in good faith.” But considering the massive number of disputes claiming failures to negotiate in good faith, that go before the NLRB every year, the term is rather vague. While there is no specific list, a few examples of acts that might be found to violate the “in good faith” requirement include:

  • Refusing to bargain with the other side about valid workplace issues.
  • Changing or disregarding the terms of a signed contract without the consent of the other side
  • Unilaterally changing terms of employment.
  • Agreeing to a contract with no intention of actually honoring its terms.

Good faith disputes that cannot be resolved are referred to the NLRB. The NLRB then decides whether the parties should “go back to the table” for further bargaining or declare an impasse, leaving the existing contract in force.

The Union’s Duties in Collective Bargaining

Labor unions are not obligated to support all or even any of the demands of its workers in collective bargaining negotiations. The NLRA requires only that unions treat and represent all of their members fairly and equally. 

Most unions have specific internal grievance procedures to be followed by workers who believe the union has failed to uphold their rights or otherwise treated them unfairly. For example, an employee who feels the union acted unfairly in refusing to support his or her demands for more overtime hours than agreed to in the existing contract would first look to the union’s grievance procedure for relief.

Pros and Cons of Collective Bargaining

Collective bargaining gives employees a voice. Non-union workers often have no choice but to accept the terms of employment imposed by management or be replaced by employees who will. The legally-ensured right to negotiate empowers employees to seek a more beneficial situation.

The collective bargaining process has contributed to higher wages, better benefits, safer workplaces, and improved quality of life for all American workers, whether they are union members or not.

On the other hand, collective bargaining can result in a loss of productivity. The bargaining process can take months and require the participation of many, if not all employees during working hours. In addition, there is no guarantee that the process will prevent a strike or work slow-down.

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