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.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
