Collective Bargaining

How collective bargaining works

In the US private sector, collective bargaining is governed by the National Labor Relations Act. Once a union is certified or lawfully recognized as the representative of a bargaining unit (for example, all non-supervisory associates at one distribution center), the employer must bargain with the union and may no longer deal directly with individual employees on mandatory subjects.

Section 8(d) defines the duty as meeting at reasonable times and conferring in good faith. Neither side has to agree to any proposal or make a concession. Good faith is judged by conduct: refusing to meet, refusing to provide relevant information the union requests, or making changes without bargaining are typical violations.

A first contract usually takes the longest; it is common for first-contract talks to run a year or more. Renewal bargaining starts some months before the old contract expires. Most terms of an expired contract continue while the parties bargain, under the status quo rule.

Mandatory, permissive and illegal subjects

The law sorts bargaining topics into three groups, following the Supreme Court's 1958 Borg-Warner decision.

Mandatory subjects are wages, hours and other terms and conditions of employment: pay rates, overtime, shift differentials, schedules, benefits, seniority, discipline, layoffs and recall, safety rules, and drug testing of current employees. The employer must bargain over them and cannot change them unilaterally.

Permissive subjects may be discussed if both sides agree, but neither side may insist on them to the point of impasse, such as the size of the bargaining team or internal union matters.

Illegal subjects cannot be agreed even if both sides want to, such as a closed shop requiring union membership before hire, or discriminatory terms.

What a CBA usually contains

• Recognition clause defining the bargaining unit.
• Wages by classification, step increases, differentials and general increases for each year of the contract.
• Hours and scheduling rules, overtime distribution and shift bidding.
• Seniority for layoffs, recalls, shift choice, vacation and internal job bids.
• Just cause for discipline and discharge, usually replacing at-will employment for covered employees.
• Grievance and arbitration, the step-by-step process for disputes ending in binding arbitration; see grievance procedure.
• Management rights reserving decisions to the employer.
• No-strike and no-lockout clauses for the term of the agreement.
• Union security, requiring membership or fees after a set period, where state law allows it; see right-to-work states.
• Probationary period for new hires, often 30 to 90 days, during which discharge is not subject to arbitration.
• Duration, typically three to five years.

How a CBA changes hiring and HR work

Recruiters and HR teams who move from non-union to unionized sites are often surprised by how much the contract decides.

• Internal postings first. Many contracts require open positions to be posted internally and awarded by seniority among qualified bidders before external hiring.
• Pay is fixed by classification. You cannot offer a new hire above the contract rate or skip steps without the union's agreement, even in a tight labor market.
• Probation length is set by the contract, not by company policy.
• Hiring halls in construction and some other industries refer workers to employers, and the contract sets how referrals work.
• Union notice. Some contracts require the employer to tell the union about new hires and give the union time at orientation.
• Temps and contractors. Subcontracting and use of temporary staff are often restricted or capped.

Make sure recruiters and hiring managers have a summary of the hiring-related articles before they post a single job.

Union density and context

According to the Bureau of Labor Statistics, the union membership rate in the US was 9.9 percent of wage and salary workers in 2024, with about 5.9 percent in the private sector and about 32 percent in the public sector. Representation is concentrated in utilities, transportation, telecommunications, construction, some manufacturing, grocery and hospitals. Contact centers and warehouses are mostly non-union in the US, though organizing campaigns in logistics and retail have increased.

Outside the US, collective bargaining often happens at industry or national level, and agreements can cover employees who are not union members. A US company opening operations in much of Europe may find pay and hours already set by a sector agreement. Public-sector bargaining in the US is governed by state law and varies widely. This page is informational, not legal advice.