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.