Some of the most viewed topics on this blog are those concerning double breasted company.  That is a two separate firms, commonly owned, one that is a signatory to a union and the other that is merit shop.

An issue frequently encountered with double breasted construction companies is an union arbitrator’s jurisdiction over the non-signatory firm.  The issue usually goes something like this.  A signatory employer’s collective bargaining agreement contains language prohibiting double breasting (which could be invalid).  The collective bargaining agreement also contains an arbitration provision requiring all disputes concerning a breach of the agreement (a grievance) be decided by an arbitrator in private arbitration.  The union files a demand for arbitration claiming that the union signatory has breached the collective bargaining agreement’s anti-dual shop provision.  The union names the non-union firm as a party to the arbitration based on its status as an alleged “single employer.”

What should the non-union firm do?  It should ignore the arbitration demand or file an action in federal court to obtain a court order prohibiting the arbitrator from taking any action against it.  The law in most – if not all – jurisdictions is that an arbitrator has no jurisdiction over a non-signatory firm.  If the union obtains an arbitration award against the non-union firm, the District Court will vacate that award if the non-union firm requests relief.  The general rule is that only a court can determine whether a non-signatory is bound by a collective bargaining agreement.  Moreover, some courts have held that a court must determine that the union and non-union entities are a single employer before that will happen.  Because a single employer finding is fact sensitive, that cannot be done without discovery.

The take away.  If you own a dual shop firm and receive a demand from the union to arbitrate, you need to review your collective bargaining agreement, be prepared to fight the union, and win.