Recently, our firm’s labor and employment law section completed representation of a unionized client in bargaining for renewal of a contract which expired in 2009. After many bargaining sessions, the parties could not agree to a few key items, including a large increase in the employee’s share of medical insurance cost, so our client declared impasse and imposed the change unilaterally.

Based on our presentation of the entire course of bargaining, the NLRB regional office in Hartford dismissed the union’s unfair labor practice charge, and the NLRB Office of Appeals in Washington recently affirmed the dismissal.

I asked one of my law partners, Michael Lavelle, to share his experiences with the issue and what employers can learn about this often misunderstood area of law.

“Your mission, dear blog reader,  should you decide to accept it, is to understand what a labor impasse is….”

One of the many constraints in dealing with a workforce represented by a labor union is that no change can be made to wages, hours or working conditions without collective bargaining with the union representatives.

Typically, agreed-upon wages, hours of work and working conditions are reduced to writing in a collective bargaining agreement, and then bargaining takes place periodically as contracts expire and are renewed.

However, even if the written contract expires, the existing terms remain in effect and can’t be changed unilaterally by the employer. This means that the employer is effectively bound by the expired contract (with a few exceptions not pertinent here).

If bargaining for a new contract is protracted, the employer may find itself obligated to employment benefit provisions which become increasingly onerous. For example, if the employee’s contribution to the premiums for group medical insurance is capped at a dollar amount, the employer must absorb all premium increases while trying to bargain for a new contribution rate.

Under federal labor law, neither party is required to agree to contract terms, but obviously bargaining can’t continue indefinitely without management at some point being able to make changes for business necessity.

The answer to this dilemma is known as impasse.

When the employer and the union have bargained in good faith but are unable to reach agreement on all issues, an impasse is reached. Impasse frees the employer to make unilateral changes in the wages, hours and conditions of employment.

Obviously, impasse is a complex concept, and subject to abuse. An employer can’t just bargain for a few sessions and then declare impasse and implement all of its proposed changes, since that would undermine the entire collective bargaining process, which is protected by law. There are hundreds of National Labor Relations Board cases in which unions have filed unfair labor practice charges claiming unilateral changes were illegal because impasse had not legitimately occurred.

Being very protective of its mandate to foster collective bargaining, the National Labor Relations Board is usually quite skeptical of a claim by an employer that impasse has been reached. A reversal by the NLRB of illegal unilateral changes means that the employer must repay the cost of the changes to employees, which often leaves the employer in a worse position.

Since unfair labor practice charges are almost inevitable, a declaration of impasse by an employer can be a costly gamble, subject to second-guessing by the NLRB years after the event.

So, is a labor impasse impossible? No, but it requires good faith and thorough negotiations to get there.

“…..As usual, should you or any member of your company be captured or killed fail, the secretary blog will disavow any knowledge of your existence. This tape will self-destruct in five seconds. Good luck.”