set conditions which management had to meet before it could subcontract. A few obligated the company to notify the union in advance of subcontracting, and others required union approval of contracting out. A number of agreements banned contracting out where the prime employer had available the necessary skills and equipment, while subcontracting was permitted in others if it represented savings to the company, if the company had no room for additional workers, or if there was an emergency or an unusual backlog of orders.

In an effort to protect contract standards, a small number of apparel provisions banned contracting out if its purpose was evasion of the terms of the prime employer's agreement. Several clauses insisted on compliance with the prime employer's labor agreement, but most barred subcontracting unless the subcontractor was "union" or maintained "a union shop," or was "in contractual relations" with the same local union that was signatory to the prime employer's agreement. Illustrative of the language often found in such provisions are the following:

No work shall be given by any [association] member to a contractor who is not in contractual relationship with the union.

*

A manufacturer who employs contractors shall employ only contractors who are in contractual relationship with the New York Joint Board of the Amalgamated Clothing Workers of America and shall not cause or permit any work to be performed for him, directly or indirectly, by any person, partnership, corporation, or contractor who is not in contractual relationship with the New York Joint Board . . . .

Other clauses required the subcontractor to have an agreement with another local of the same international union, or with the same or another local of the same international union, depending upon the location of the plant or the kind of work to be let.

Two agreements, both outside the metropolitan area of New York City, recognized that situations could arise where no union contractors would be available. Under such circumstances, the use of nonunion subcontractors was allowed subject to very detailed limitations and procedures, as in the following provision:

In the event the employer is unable to obtain the services of a union contractor, he shall request the union to furnish If the union fails to furnish a union contractor satis

one.

factory to the employer, the employer may employ any available contractor satisfactory to him, provided, however, that said employer shall not have the right to arbitrarily reject a proposed contractor as unsatisfactory without good cause.

When a union contractor satisfactory to the employer [becomes] available, no further work will be delivered to such nonunion contractor, it being understood that at no time is an employer obligated to remove any materials from a nonunion contractor during the process of production.

Upon notice from the union that a contractor is available under the provisions of this clause, a manufacturer shall have 3 weeks to remove all work from a nonunion contractor.

A basic control mechanism regulating the subcontracting system in the apparel industries is the registration of subcontractors with the union. By this device, unions in the industry maximize knowledge of and control over subcontractors and their operations. The same "blanketing in" that the construction industry achieves by contract compliance is provided here by the registration requirement. The following provision illustrates the form taken by registration clauses:

No work shall be sent to any contractor or submanufacturer unless such contractor or submanufacturer shall have been registered by the member of the association with the union.

In a similar vein, agreements were reached with two subcontractors' associations requiring members to register their prime employers.

Negotiators of several agreements have used the registration clause to spell out the prime employersubcontractor relationship, including the rights of subcontractors and their workers. One clause, for instance, specified the following aspects of the relationship:

1. The prime contractor must use his registered subcontractors to the exclusion of all others.

2. In return, the registered subcontractor will work exclusively for the prime contractor who designated him. 3. Work shall be shared between the inside shop and the registered subcontractor.

4. Forms registering subcontractors for the first time must give detailed information on their volume of production for the preceding year and on their capacity to produce.

5. If a registered subcontractor goes out of business, his workers shall be absorbed into the inside shop and into the shops of the prime employer's other registered contractors.

6. A prime employer may change or add subcontractors when modifications in his product justify it, subject to the approval of the industry's impartial chairman.

Many provisions required the prime employer to guarantee the wages (in full or in part) or all the contract terms for the subcontractor's employees. For example:

In all cases where the [employer] has work performed ... outside his own shops . . . he hereby assumes full responsibility for the conditions of such outside shop and for the payments of wages of the workers employed by such outside shop, with the same force and effect as if that shop were owned directly by [him].

The members of the association hereby guarantee the payment of the wages of the employees of their respective union contractors and submanufacturers to the extent of

the work performed . . . . If the contractor shall fail to pay. . . in full, the liability imposed by this provision shall not exceed 2 weeks' wages where employees are paid weekly and 3 weeks' wages where the employees are paid every 2 weeks.

Several other clauses required the prime employer to pay the subcontractor at least an amount sufficient to cover "contract" wages or obligated him to withhold sufficient money to cover wage payments:

The members of the association shall pay to the respective contractors an equitable price sufficient to pay the workers the piece rates and wages to which they are entitled under this contract.

In order to secure the wages of the workers in the shops of subcontractors, the employers are urged to ascertain the payroll of the contractors and make sure to withhold an amount sufficient to cover the payroll of the workers in the contracting shops.

Many apparel clauses limited management's right to subcontract in strike situations. Such provisions usually specified that the prime employer could not subcontract to a struck contractor and that his employees could not work on struck goods. Typically, this clause was phrased thus:

The respective members of the association shall not, directly or indirectly, have any work performed by, or purchase any of their products from, any other concern during the pendency of a strike declared against that other concern by the International Ladies' Garment Workers' Union or any of its locals.

Several additional clauses safeguarded workers from disciplinary action in the event they refused to work on struck goods, declaring such work to be not "in the regular course of employment." Other provisions recognized that neutral em

2 See footnote 1.

ployers might be hurt by a rigid application of the strike prohibition; these allowed goods in a struck plant to be finished or required substantial advance notice by the union before a strike in order to give the neutral employer an opportunity to make other arrangements.

Other Industries. Among the remaining agreements (other than in construction and apparel) where conditions were attached to subcontracting of part of the production process or major activity, both the preservation of employment opportunities and the protection of contract standards received. approximately equal attention. Among the conditions which were to be met before subcontracting was permitted were restrictions concerning layoffs, notice to the union, and seniority status, along with a number of limitations related to skill and equipment needs and to production considerations. To protect contract standards, the more common limitations that were found required subcontractors to have a union contract and to pay prevailing area wages.

EMPLOYMENT EFFECTS

The largest number of limitations upon subcontracting were designed to minimize any adverse effects upon employment. A number of agreement provisions, scattered among food, chemicals, rubber, trucking, communications and utilities agreements, barred subcontracting if employees who could do the work were on layoff or working part time. Most, however, forbade contracting out if it would result in subsequent layoffs or part-time work. Such provisions were more frequent in communications and utilities agreements, but they were also found among food, petroleum refining, transportation equipment, and trucking contracts. Illustrating the latter type are the following examples from a utility and a telephone agreement, respectively:

It is recognized that the company has the right to have work done by outside contractors. However, work performed by employees covered by the agreement will not be contracted out if this will result in the layoff of employees who normally perform such work.

Several clauses prohibited subcontracting where its purpose was to "reduce available work" or to reduce the permanent work force:

It is also the intent of the parties that work presently being performed by employees covered by this agreement will not be contracted out in order to displace present employees.

In a number of others, subcontracting was to be terminated if, in addition to layoffs or part timing, it also led to demotions, transfers, reduction in wage rates or earnings, or evasion of wage payments.

The subcontracting provisions of a few agreements, all in the telephone industry, made specific reference to jurisdictional problems. Two such agreements were with independent unions, and two others with an AFL-CIO affiliate. Examples of each are presented, respectively:

As to situations not covered by [specified sections on subcontracting] of this article, the company agrees to resist any effort by other labor organizations through jurisdictional claims to take telephone work from its employees and further agrees to confer upon request with the union delegates with respect thereto.

*

Furthermore, in the event of a jurisdictional dispute between the union and any other labor organization as to the performance of work of the type presently and regularly done by the employees in the bargaining unit, the company will favor the performance of such work by the employees in the bargaining unit.

Frequently, agreements required management to notify the union either before or after work was to be given out. The effectiveness of such clauses depends on the status of the union in the establishment rather than on agreement language. The weaker of these clauses, requiring notice after work had already left the plant, was noted in a utility agreement:

The company will advise the union within 10 days after the execution of any contract falling within this section, the stated or estimated contract price of which is $1,000 or more, of the name and address of the contractor receiving such contract.

Slightly stronger in version were several provisions that obligated management to notify the union of subcontracting without establishing a time element. More strongly worded were a larger number of clauses that directed management to notify the union in advance of intended subcontracting, thereby allowing the union time to marshal arguments in favor of expanding in-plant

employment opportunities as against contracting out.3

In other clauses, union approval was necessary only if the subcontractor was nonunion, in which case the union made sure that the subcontractor was not undercutting contract standards. Similarly, union approval was required in a utilities agreement only if subcontracting-"advantageous to the employer"-would cause layoffs or demotions, but union approval involved only a satisfactory disposition of the layoff and demotion issues.

Four agreements, all involving truckdrivers, were concerned with preserving the seniority status of the employees. Three motor freight agreements and one covering drivers and helpers in a lumber yard contained identical language, prohibiting subcontracting where the seniority of regular workers would be hurt:

The hiring of outside equipment shall not be done in such a manner as to interfere with or discriminate against the seniority status of the employer's employees.

Considerations other than those directly involving the status of in-plant employees were reflected in subcontracting clauses. A number of provisions allowed management to contract out, providing the necessary skills and equipment, although available in the plant, were already engaged on other work. Several other agreements specified that the company could let out part of the work as long as certain specialized skills or equipment were needed and were not available in the plant. Fewer agreements stipulated that all equipment in the plant had to be in use before management could contract out. Clauses including this proviso were scattered among the food, electrical machinery, professional and scientific equipment, local transit, and motor freight industries.

Many provisions allowed subcontracting in emergencies, during peak periods, or to meet sudden spurts in demand. In some cases, subcontracting was explicitly recognized as a better solution than increasing the work force only to lay off new employees after a few days or weeks. Although these provisions were dispersed among a variety of industries, almost half were found concentrated in the trucking, transit, telephone, and electric and gas utilities industries, in which demand for services could not be postponed or

See Part I, June issue, pp. 579-586, for illustrations.

met through accumulated inventories. Typical of the language concerned with "busy season" or "peak load" conditions is the following utilities clause:

The company will continue the policy of hiring contractors when . . . peaks of work would require a temporary increase of the company's forces with subsequent layoff of such additional forces.

Similar to the above clauses were those which turned on considerations of time. Subcontracting was allowed when work could not be accomplished "in the time required," when work could not "be postponed," or when "time of delivery" could not be met. For example, in an electric and gas

Nothing in [this subcontracting clause] is to be interpreted as restricting the right of the company to contract out any work during an emergency.

(a) Emergency work includes the clearing of trouble and the accompanying repair of any plant located in the territory of a connecting company.

Seventeen agreements were concerned with the savings in cost that would result from subcontracting. Only when having the work done by in-plant employees would involve "unreasonable" costs, or would not be "competitive," or "would exceed the cost" of subcontracting, or where it would not be "advantageous" or "economical to do so," contracting out was permitted, as for instance in a transportation equipment agreement:

... the work shall be performed by employees with seniority in the bargaining unit; provided, however, that in the judgment of the corporation . . . (2) the cost of producing the item in the plant or performing the work with employees of the corporation is competitive with the bids submitted by an outside contractor.

In a similar vein, a few agreements lifted the limitations on subcontracting if confining the work to the plant would affect company operations or efficiency.

UNION STANDARDS

The approach used in the construction and apparel industries in protecting union standards was similar to that found in 37 agreements which required subcontractors to be under union contract either with the same local, or another local of the same international union, or with an AFLCIO affiliate. Twenty-five clauses insisted upon compliance with the prime employer's labor agreement. A lesser number attacked the problem of the prime employer's deliberate evasion of his labor contract, or deliberate discrimination against employees or union members, by forbidding contracting out under such circumstances. A petroleum refinery agreement included this clause:

Nothing in this agreement shall limit the right of the company to contract out work except that such contracting out will not be done in order to evade any of the terms of this agreement.

Under the terms of several other agreements, subcontracting was to terminate if the employer used it to avoid paying the contract scale or overtime. A communications industry clause, for example, barred subcontracting if it was designed to avoid paying the premium for the sixth day of work.

A few provisions obligated the employer to see that a subcontractor provided prevailing area wages and working conditions or at least minimums equal to those in the prime employer's agreement. As in the construction industry, a number of agreements, largely in local and long distance hauling, provided for the subcontractor's employment of union labor or material.

Again following the example of the construction industry, the national Industrial Shows Basic Agreement, involving Actors' Equity Association, required that a guarantee of subcontractor compliance with the collective bargaining agreement be written into the subcontract:

(a) It is hereby understood and agreed that in the event the producer engages in the production of an Industrial Show with actors. . . not employed by the producer, but by an independent contractor, agent, or other employer, then the producer will, in its contract with such independent contractor, agent, or other employer, include the covenant set forth in paragraph (b) hereof . . .

(b) As an integral part of this contract, it is hereby agreed by (name of independent contractor to be inserted) that all actors shall be paid the wage scale and be accorded all the rights and conditions set forth in the Industrial Shows Basic Agreement in every respect as if the said (name of independent contractor to be inserted) were directly a party and signatory to said agreement.

Other provisions created a registration system, and a small number barred subcontracting where either the prime employer or the subcontractor was involved in a labor dispute.

A few agreements contained provisions to maintain subcontracting at a certain level or to cut it back, as in a transportation equipment provision:

It is the intent of this article to insure that the company shall continue as a manufacturing company; to insure that it shall conduct its affairs to reflect its purpose to continue virtually exclusively as a manufacturer of its own products...; and to insure that the company shall reduce or maintain at a minimum the subcontracting or licensing of work which it can perform . .

Two utility agreements carried such curtailment to its logical next step by calling for its eventual termination:

The company will study the question of . . . work by outside contractors on its property and will plan with the local toward a discontinuance of such work by contractors over a period of time . . . .

A utility provision required the prime employer to meet with the union for discussion if at anytime his employees and those of the subcontractor used the same "company-owned manually operated equipment." Finally, two transportation agreements gave management a free hand in subcontracting projects the duration of which would be 2 weeks or less, and a local transit agreement allowed management to subcontract only "one-time jobs."

Enforcement of Subcontracting Provisions

Although the dispute settling machinery provided by most collective bargaining agreements would normally operate in cases of disputes over subcontracting clauses, a number of subcontracting provisions, particularly in the apparel industry, specifically authorized the parties to invoke the grievance procedure in such disputes. Some of the apparel agreements repeated in each clause of the subcontracting section of the agreement that the parties could refer disputes to the grievance

procedure. Many of the agreements in this industry, particularly in New York City where the impartial umpire system is well established, permitted the full grievance procedure to be bypassed and the case taken up directly with the arbitrator. In the following clause, however, the arbitrator receives a dispute only after disagreement between the employers' association and the union, and a time limit is set for his decision.

Should the union object to the employment of such contractor, no work shall be given by the member of the association to the contractor until the matter is adjusted between the representatives of the association and the representatives of the union. Upon their failure to agree, the matter shall be disposed of by an impartial arbitrator not later than 48 hours after the submission of the case to the arbitrator.

The following transportation equipment provision allowed the grievance procedure to be used if the union was not "satisfied" with management's reason for subcontracting:

Where outside contractors are utilized, notification to that effect and the reason therefor will be furnished the union. If the union is not satisfied with the reasons given, the matter may be processed through the grievance procedure.

Penalties designed to aid enforcement of subcontracting clauses were found in a small number of agreements. These included financial damages (usually determined by an arbitrator), strike action, or in one case, injunctive relief. The largest number, again found predominantly among apparel clauses, required the payment of damages when a prime employer used a nonunion subcontractor or when he underpaid his own workers or his subcontractor (who, in turn, was forced to underpay his employees), as in a shirt and sportswear agreement:

Where it shall have been established that there has been an underpayment made by a member of the association to his contractor or submanufacturer or by him to the workers, the amount of such underpayment shall be paid by such member of the association to the parties so underpaid, and he shall, in addition to the foregoing, be subject to such additional liquidated damages as may be agreed upon between the association and the Joint Board or, upon their failure to agree, as may be determined by the impartial chairman

Another group, consisting largely of clauses in construction agreements, provided that violation of the subcontracting clause was sufficient cause for