In 2014, Doug Stockwell, Business Manager of Operating Engineers Local 324 (OE), started challenging the historical interpretation of Article IX of the MITA/OE Road Collective Bargaining Agreement. Article IX states that all subcontractors must comply “with all the rates, terms and conditions of this Agreement…” According to Mr. Stockwell, Article IX requires non-signatory contractors to pay into the Local 324 Fringe Benefit Funds while acting as a subcontractor for a signatory contractor. MITA objected, primarily because the union’s interpretation was contrary to over 50 years of interpretation, which was that Article IX required only that the subcontractors agree to pay their employees at a total rate equivalent to the union wage and fringe rates.
Local 324’s new interpretation of Article IX was considered a “game changer”, and MITA fought hard in opposing the Union’s demand that non-signatory contractors pay into the Local 324 fringe benefit funds. The Union began filing grievances under Article IX in 2016 and 2017, at which time MITA retained Don Scharg of Bodman PLC to develop a strategy opposing the grievances.
Arbitration hearings were held on October 17 and December 12, 2017, over grievances filed against Ajax Paving, D.J. McQuestion & Sons and Grand River Construction. Local 324 was first to present its own case and arguments. After 1.5 days of testimony, Local 324 rested its case. Instead of presenting witnesses, MITA’s legal counsel took the unconventional approach of asking the arbitrator to dismiss all of the grievances because the Union had not presented sufficient evidence to support its case.
The Arbitrator issued his decision on January 18, 2018, ruling:
1. The grievances were denied because they were untimely. The contract provision had been in the labor contract since 1961 and the Union challenge was first raised in 2014, but the grievances were not filed until 2016 and 2017.
2. Article IX is also ambiguous and “the Union had not proved Article IX literally requires contractors to obtain agreement from non-signatory subcontractors to make such [fringe benefits] contributions or that it ever had been so applied in practice.”
3. The arbitrator would not try to interpret the subcontracting provision on the directed verdict motion and directed the parties to resolve the issue in upcoming contract negotiations.
This arbitration resulted in a complete vindication of MITA’s position and is a big win for the entire heavy/highway construction industry across Michigan. Had the industry lost in this arbitration outcome, the dynamics of competitive bidding would have changed dramatically to the point that union prime contractors would likely no longer receive quotes from non-signatory contractors and thus, over time, become less and less competitive. With this decision, all facets of the industry, union and non-union contractors, as well as union and non-union employees, reap the ultimate benefit.
The current road contract expires on May 31, 2018. We look forward to meeting with OE Local 324 to reach a new labor contract under which the contractors, their employees, and Local 324 can have many more years of success together.
Please contact Mike Nystrom, Executive Vice President, if you have any questions regarding the outcome of this arbitration. Mike can be reached by calling the MITA office at 517-347-8336 or by email at mikenystrom@mi-ita.com.
