Contract Proposals

Beginning contract preparations well in advance of negotiations pays off. By starting early, you’ll have plenty of time to gather information about the bargaining unit, determine bargaining priorities, and gather facts to present to the employer in support of each proposal. You’ll also have time to involve the membership in contract preparations and educate them on the importance of the issues you’ll bring to the table.

This outline briefly describes the process for developing and justifying contract proposals. But no amount of information or facts will alone mean success in bargaining. Only coupled with power – through member involvement, community support, and other activism – will facts lead to great results. For additional information, contact the AFSCME Department of Research and Collective Bargaining Services.

Collect Information Available from the Local, Council, and/or Employer

Basic Bargaining Unit Statistics:

Number of full-time and part-time employees in each department by job classification and pay grade, as well as by shift and facility.

• Seniority date and age of each employee.
• Number of women and minority group members in each job classification.

Wage And Benefit Information:

• Current pay for each employee.
• Average wage of employees in the bargaining unit.
• Amount of overtime, call-in pay, shift differentials, etc., actually paid in each year of the current contract (get year-to-date information for current year).
• Cost of benefits per year to employer (health insurance, pension, sick leave, vacation, etc.). Since health insurance is likely to be a major issue at the table, you may need to request detailed health care information (see Appendix for checklist).
• Any other information you already know you’ll need for negotiations.

For example, if you know that health and safety is an issue, you may want to ask for illness and injury statistics. If contracting out is a problem, information on which services are contracted, and any details available about cost or quality problems, will be helpful.

Study the Current Contract

• Analyze the current contract. Is the language clear? Does it work? Does it reflect what was decided at the last negotiations?
• Compare your language with other contracts in the area. Compare to both public jurisdictions and to local private sector contracts.
• Talk to stewards to find out what problems they have run into in administering the contract.
• Analyze grievances and arbitrations to see where you have won and where you have lost. Use this information to decide if you need to strengthen certain contract provisions.
  Look for changes since the last contract that you may want to address in bargaining. Has the employer introduced new technology? Has work been contracted out?
  Does the contract contain language that facilitates internal and external organizing? Issues such as accretion, release time, leaves of absence, neutrality and card check, communication and others provide the tools necessary to build our power. See “Bargaining to Organize: Sample and Model Language” resource manual for more information. A related manual, “Using our Power to Build Power: Bargaining to Organize,” is also available from the Research and Collective Bargaining Services Department.

Find Out What the Members Want

• Hold a membership meeting and/or department meetings to discuss general ideas for contract proposals.
  Survey members on their bargaining priorities
  Ask employees about issues. Meet with workers one-on-one, at work or at their homes, to get their input and get them engaged in the process.

Develop Contract Proposals

There are many ways to handle an issue in contract language. The right way is the one that is best for your particular situation. Sample contract clauses are available from the Department of Research and Collective Bargaining Services.

Cost Out Your Proposals

You’ll want to “cost out” your proposals to determine their total cost to the employer. This information will give you a clear idea of how much you’re asking for and allow you to look at your proposals in light of the employer’s financial situation. Are your proposals too costly? Or could you reasonably ask for more? What are the “big ticket” items?

Costing Wage Increases:

The simplest method for figuring the cost of wage adjustments is to base your calculation on the average wage of employees in the bargaining unit. Typically, this is figured on an annual basis. For example, if the average wage is $10.00 per hour, then a 5 percent increase costs 50 cents per hour, per employee ($10.00 x .05). You can calculate the total annual cost by multiplying the result by the number of employees and the number of hours worked per year (2080 hours if everyone works 40 hours per week, 52 weeks per year).

In addition, the 5% wage increase also increases the cost of “wage-related” fringe benefits. These items typically include the employer’s share of FICA taxes, employer pension contributions, overtime, and premium pay (e.g., shift, holiday, and weekend differentials), if the premium pay is expressed as a percentage of base pay and not as cents per hour. Often, a fringe benefit factor (or “roll-up” factor) is developed to incorporate wage-related fringe benefits. Typically, the roll-up factor is 14% to 18%. Remember, only costs that increase as a direct result of wage increases should be considered wage-related. The employer share of health benefit costs, leave, and holidays are often not affected by across the board pay increases and should not be considered. If the employer is using a fringe benefit factor you should specifically ask what is included and how the costs are broken down.

If you are bargaining for a cents-per-hour increase, rather than a percent, the calculation is even easier. Just multiply the increase per hour by the number of employees and the number of hours worked.

Costing Benefit Proposals:

• Paid Leave: Unless the employer replaces employees on paid leave, there is no real cost to the employer of providing leave. If employees are replaced or other employees work overtime, the cost equals the hourly wage paid to the replacement times the number of hours that the replacement works.
• Insurance and Pension Benefits: For complicated insurance and pension questions, you may want to consult the Department of Research and Collective Bargaining Services. Many benefit changes, however, are easy to calculate. For example, if you want the employer to pay $20 per month more towards health insurance premiums, multiply $20 by the number of employees and then by 12 (to get the annual cost).

Costing Other Proposals:

Some proposals may have no cost to the employer (such as improvements in the grievance procedure) or may have relatively small cost. For example, if you are asking the employer to purchase rubber gloves to protect workers, find out how much the gloves are likely to cost and multiply the cost by the number of pairs you estimate the employer would need to buy in a year.

Total Cost Of Your Proposals:

Add up the cost of each of your proposals. Then you can cost out the employer’s proposals and compare them. Some union proposals may also reduce employer costs. For example, if the employer changes its scheduling practices, will it reduce the need for overtime to cover unscheduled absences?

For more information on costing contract proposals, contact the Department of Research and Collective Bargaining Services.

Justify Your Proposals

Once you’ve decided on your bargaining demands, drafted proposals, and estimated how much they will cost, you’ll need to build your case for each proposal.

Justifying Wage And Benefit Demands:

In these difficult economic times, pay demands sometimes end up as negative headlines in the local newspapers. Some unions propose a “substantial” or “equitable” raise initially, rather than a specific amount, which allows some time and flexibility to see how negotiations proceed.

Arguments on which to base proposals for increased wages and benefits include:

• Comparable wages and settlements
• Increase in the cost of living

Wage Comparisons:

Select jobs for comparison:

• “Benchmark” jobs – classifications which contain a substantial number of employees and are common to many employers should be selected for comparison. For example, not all employers will have a Photolithographer, but most will have a substantial number of employees in the Clerk I classification.
• Use job descriptions to pick the appropriate classifications for comparison among employers. For example, the duties and responsibilities of Secretary II where you work may be closest to those of Secretary III in another workplace.
• Compare rates for benchmark jobs with other unionized public and private sector employers in your area.
• Compare rates with similar employers across the country.
• Be careful to select unionized employers, and employers in the same industry, which employ a similar number of employees. Management will often present area wage surveys which include rates from many small, non-union employers. On the other hand, you should be aware of these comparisons, especially if the employer is in an industry or sector with many non-union entities.
• Compile information on recent settlements.

In the private sector, settlement information, wage rates, and copies of actual contracts are much less available than in the public sector.

The Department of Research and Collective Bargaining Services can provide relevant comparisons, information on recent AFSCME settlements, and nationwide trends in the public and private sectors.

Cost of Living:

Analyze the effect of changes in the Consumer Price Index (CPI).

The CPI measures the average change in prices of goods and services purchased by consumers for day-to-day living. This information can show that an increase is necessary to maintain purchasing power and provide an adequate standard of living. In times of inflation or fiscal crisis, the CPI will often increase faster than wages, resulting in a loss of purchasing power.

The CPI is calculated for two groups: Urban Wage Earners and Clerical Workers (CPI-W) and All Urban Consumers (CPI-U). For bargaining purposes, the CPI-W is generally the best to use because it is limited to wage earners, whereas the CPI-U covers salaried workers, the self-employed, retirees, and the unemployed, in addition to wage earners.

Information on the CPI is available from the Bureau of Labor Statistics or the Department of Research and Collective Bargaining Services.

Benefit Comparisons:

Comparisons are also very important in justifying demands for improvements in health insurance, holidays, vacations, and other benefits. As noted above, look for comparisons with similar employers in the public and private sectors in the relevant geographic area.

The Department of Research and Collective Bargaining Services can provide you with surveys summarizing benefits in states and large municipalities, and general information on benefits in the public and private sectors.

Justifying Language Proposals:

You’ll also need to substantiate the need for additions or changes to other contract language.

• Compile information from members and stewards.

For proposals which relate to specific workplace situations, members’ experiences will be one of your strongest arguments. For example, if you are bargaining for health and safety language, the bargaining team can present members’ stories about hazardous situations they face.

• Collect similar language from other relevant employers.

Your employer may be more likely to agree to new language if you can show that other employers have already agreed to similar language, and particularly if you can show that the language has produced a positive result. For example, better language on health and safety may lead to lower workplace injury and illness rates, and to lower workers’ compensation costs.

Learn About the Employer’s Financial Situation

You’ll know more about what to expect from the employer during negotiations, and how your proposals are likely to be received, if you understand the employer’s financial situation.

Understanding your employer’s finances is particularly important if the employer claims inability to pay. For more information about public sector budgets, see “Knowing the Numbers: A Guide to Public Budget Analysis,” available from the Department of Research and Collective Bargaining Services.

Get Involved Early:

In most public jurisdictions, the budget cycle begins seven to nine months before the start of the new fiscal year. You’ll be better prepared for negotiations if you use the budget process to get information on the proposed budget and to express the union’s priorities.

In the private sector, employers are not required to “open their books” unless they claim they do not have the money to meet your demands. However, most private employers, including non-profits, are required to file various records and reports with federal, state, and/or local governments. These documents are available to the public and can provide you with considerable financial information on your employer. If your employer claims inability to pay for wage increases, the employer is obligated to provide financial information to support the claim, upon request by the union.

Determine What Laws Apply to Your Negotiations

Different laws will apply in different bargaining situations. You should acquaint yourself with the laws covering employees in your area.

In the private sector, the National Labor Relations Act (NLRA), the Occupational Safety and Health Act (OSHA), the Employee Retirement Income Security Act (ERISA), and numerous state and local laws may apply.

In the public sector, state, county, and/or municipal collective bargaining and labor laws and executive orders may apply, in addition to civil service laws and regulations. Many public employees are covered by state occupational safety and health acts and/or right-to-know laws.

In both the public and private sectors, the Fair Labor Standards Act (FLSA), the Civil Rights Act, the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), the Pregnancy Discrimination Amendment, and the Age Discrimination in Employment Act (ADEA) apply. However, Supreme Court rulings have restricted the rights of state workers to enforce these laws. Therefore, state workers must consider developing contract language to enforce the requirements of these laws through the grievance procedure.

CONCLUSION

A saying attributed to an ancient Chinese martial arts master is, “If I had six hours to cut down a tree, I would spend four hours sharpening my axe.” Although the real world of collective bargaining does not often allow an ideal amount of preparation time, efforts made before reaching the table almost always pay off. The main components of preparation include finding out what members need and mobilizing them to fight for it, collecting information about the employer and its finances, studying the current contract, costing proposals, and crafting evidence and arguments to support them.

APPENDIX

Health Care Information Checklist:

The following is a list of information that should be requested from the employer or the plan administrator in order to analyze the health care plan and determine possible cost containment approaches:

1. 1. Complete description of health plans offered.
   2. Complete description of ancillary benefits offered (dental, vision, prescription drug, etc.).
   3. Enrollment in each plan (including any HMOs) showing the number of employees with family and single coverage. There may be other coverage options, e.g., employee and child(ren), employee and
   4. Last year, current year, and projected monthly rates.
   5. Employer contribution to each plan and method of determination (percentage of cost, flat dollar).
   6. Financing information on each plan (such as type of insurance arrangement or self-insured; retention charges; administrative costs; reserves).
   7. Experience statements.
   8. Information on any cost containment efforts to date and any identified savings.
   9. Utilization data on each health plan (not generally available for HMOs):
      

      In-patient:

      Number of admissions, days, total payments, payments by hospital and type of admission (surgical vs. non-surgical), day of admission and length of stay, utilization by diagnostic category.

Out-patient:

Total payments, total visits, utilization by type of service (surgical vs. non-surgical), utilization by diagnostic category.

Professional:

Total payments, utilization by type of service (surgical vs. non-surgical and in-patient vs. out-patient vs. office).

Major Medical:

Total payments, number of claims.

Prescription Drug Data:

Number of prescriptions filled, professional filling charge, cost containment efforts, claims audits.

Optical Plan:

Total costs, cost per service (exam vs. materials), cost containment efforts, claims audits.

Dental Plan:

Total costs, utilization data, audits (if any).

• Employer practice for continuing coverage to retirees. Copies of any consultants’ reports.
• Employer proposals, if any.
• Geo-access studies on HMO plans (the proximity of providers to members’ homes and workplaces determined by comparing the zip codes of providers with employee zip codes). Almost all large HMOs have the technological ability to perform such studies.
• Copy of claims denial appeal procedure, if any.