Labor Relations and Collective Bargaining by Michael R. Carrell and Christina Heavrin (10th edition)

Introduction to labor relations

• Labor relations. Any activity between management and unions or employees concerning the negotiation or implementation of a collective bargaining agreement.
• Collective bargaining agreement. A written and signed document between an employer entity and a labor organization specifying the terms and conditions of employment for a specified period of time.
• Labor organization. Defined in Sec. 2. [§ 152] of the NLRA and means any employee committee or other organization of any kind in which employees deal with employers concerning grievances, labor disputes, wages, hours, or working conditions.
• Union density. The number of union employees in proportion to the total number of employees in a state or other area.
• Craft union. A labor union whose membership is organized in accordance with their craft or skills.
• Industrial union. A labor union whose membership is composed primarily of semiskilled or unskilled workers, such as automobile workers and steelworkers, who are organized on the basis of the product they produce.
• Salary arbitration. A process specified in a sport’s CBA that provides if a player and team cannot agree on a new salary for a future, they agree to submit the issue to an arbitrator who will make a final and binding decision.
• Free agent. A player who is permitted to negotiate contract terms with any club. Players are not usually eligible for unrestricted free agency until they turn a certain age. They could become unrestricted free agents earlier if a club exercised its walk-away rights or if their contract was bought out or terminated.
• Union membership. Employees of an organization that belong to a labor organization.
• Preemption. A legal theory in which federal law takes precedent over state law.

Private sector labor relations: history and law

• Labor union. An organization of workers dedicated to protecting their interests in the workplace and improving wages, hours, and working conditions.
• Trade unionist. One of like-skilled workers, such as printers, shoemakers, tailors, and bakers, who organized the earliest unions in the United States.
• Labor injunction. A court order that prohibits any individual or group from performing any act that violates the rights of other individuals concerned. Until 1932, injunctions were primarily used by employers to end boycotts or strikes.
• Company union. An employee organization formed by an employer and recognized within a company, often it will offer employer-conceived reforms, such as health benefits and better living conditions, to discourage employee unionization. This type of union usually does not meet the requirements of the National Labor Relations Act and thus is not considered a true union.
• Railway Labor Act. Passed in 1926 to prevent disruptions in the nation's rail service, it required railroad employers to negotiate with employees' union. In 1936 it was expanded to include the airline industry.
• Norris-LaGuardia Act. Passed in 1932, this act restricts the federal courts from issuing injunctions in labor disputes, except to maintain law and order. The act also made yellow-dog contracts illegal.
• National Labor Relations Act (Wagner Act). The cornerstone of U.S. Federal labor law. The act was the first in history to give most private sector employees the right to organize into unions, to bargain collectively with employers, to define unfair labor practices by employers, and to create the NLRB.
• National Labor Relations Board. An independent agency of the federal government that serves to investigate unfair labor practices, determine appropriate bargaining units, certify unions that legally represent a majority of employees, and administer the provisions of the National Labor Relations Act.
• Fair Labor Standards Act. Passed in 1936, it requires employers to pay covered employees at least the federal minimum wage and overtime pay of one-and-one-half-times the regular rate of pay for work exceeding a 40-hour week.
• Scab. A derogatory term to describe workers who cross a union picket line to perform the jobs of striking workers.
• Taft-Hartley Amendments. Also known as the Labor Management Relations Act of 1947, it generally was created to counterbalance the provisions of the National Labor Relations Act of 1935. The law declared closed shops and automatic check-offs illegal, cited unfair labor union practices, and protected the rights of employees who chose not to unionize. The law also created the Federal Mediation and Conciliation Service, restricted secondary boycotts and strikes, and gave states the right to outlaw union shops.
• Landrum-Griffin Act. Passed in 1959 to help regulate internal union operations, the act amended the Wagner Act and the Taft-Hartley Act and resulted in the limitation of boycotts and picketing, the creation of safeguards for union elections, and the establishment of controls for the handling of union funds.
• Employee Free Choice Act. Congressional bill that would make it easier for unions to organize new members, achieve a first contract, and increase certain penalties fails in the Senate in 2007.
• Coalition of Labor Union Women. Founded in 1974, this union was formed to promote the unionization of women in the workforce.

Public sector labor relations: history and law

• Dual sovereignty. The sharing of governmental power between the federal and state governments. Under the U.S. Constitution, all powers not granted to the federal government are reserved for the states.
• Home rule. A flexible grant of powers from the state to municipalities to determine their own goals without interference from the state legislature or state agencies.
• Spoils system. In the early 1800s, this patronage system for the federal government meant that workers were hired on the basis of who they supported in elections. Employees were expected to support political candidates or lose their job.
• Pendleton Act. Created the federal merit system to address the abuses of the spoils system; administered open competitive examinations; protected employees from being fired for political reasons; and provided that Congress set the wages for federal workers.
• Fraternal organization. A union that represents public employees in one profession and began as a professional organization before widespread collective bargaining by public employees.
• Hatch Act. Passed in 1939, amended in 1993, the Hatch Act limited the political activities of federal employees to shield workers from political pressure and ensure that the resources of the federal government were not used to favor a political party.
• Civil service system. A governmental system of employment based on merit. Employee selection is based on examination scores or an assessment of experience and abilities. Promotion, advancement, and discipline are based on job performance.
• Sovereignty Doctrine. The unrestricted and paramount power of the people to govern. In the public sector, this doctrine is presented as a basic reason for not allowing employees to have collective bargaining rights or the right to strike their public employers.
• Executive Order 10988. The executive order signed by President John F. Kennedy in 1962 allowing federal employees bargaining representation, forms of employee recognition, and the right to collective bargaining.
• Civil Service Reform Act of 1978. Act designed to reform the outdated federal civil service structure, modeled after the NLRA. Created the Federal Labor Relations Authority to oversee labor–management relations within the federal government.
• Public sector-only union. A union that organizes multiple sectors of public employees but does not organize in the private sector.
• Mixed union. A union that represents both public and private sector employees.
• Pattern bargaining. A collective bargaining practice in which a national union strives to establish equal wages and benefits from several employers in the same industry. The union uses the negotiated contract of one company to serve as a model contract for the entire industry.
• Me Too Union. Public sector union demands for equal treatment when one union receives something of value.
• FOIA. So called “freedom of information acts” or “open records” makes documents of public entities generally available to all citizens. In public sector collective bargaining often financial information of a public entity is generally available to all bargaining units.
• Multilateral bargaining. Generally refers to negotiations in the public sector where the authority to commit to a collective bargaining agreement may be shared by the executive and legislative branches, and thus three parties are involved in negotiations.
• Executive-legislative. A form of government, such as the federal and state governments and most large cities, when both the executive and the legislature are considered management, but with different roles. The executive manages the government on a day-to-day basis under directives, particularly budgetary directives, of the legislative body.
• Sunshine Laws. Statutes requiring that the official business of government be conducted in public, sometimes requiring that public-sector collective bargaining sessions be open to the public.
• Union security. The provisions of collective bargaining agreements that directly protect and benefit the union, such as dues check-off and union shops.
• Free rider. An employee within a bargaining unit who choose not to join the union that bargains for an agreement for the unit. Although the employees receive all negotiated benefits, they pay no costs associated with the union.
• Cheap rider. An employee within a bargaining unit who choose not to join the union that bargains for an agreement but is required to pay a fee to the union to provide their share of the costs associated with negotiations (usually 80 to 85 percent of the regular union dues).
• Fair share. A sum of money paid in lieu of union dues, which represents the benefit a nonunion member of the bargaining unit gets from collective bargaining and contract administration by the union.
• Right to strike. For employees in the private sector, the right to strike is guaranteed by the National Labor Relations Act, but public employees are generally prohibited from striking, making the right to strike a major issue for public-sector unions.
• PATCO Strike. The first declared national strike against the federal government resulted not only in the firing of all striking PATCO workers but also in the prohibition of any PATCO striking worker from ever working again as an air traffic controller.
• Mediation. The introduction of a neutral third party into a grievance situation or collective bargaining impasse. Although mediators have no decision-making powers, they use their skills and work actively to achieve a settlement that is mutually agreeable to both sides.
• Fact-finding. A dispute resolution procedure in which a neutral third party reviews both sides of a dispute and then publicly recommends a reasonable solution.
• Advisory arbitration. Often in public sector collective bargaining the parties submit an unresolved dispute to an unbiased third party who examines the impasse and issues findings and recommendations. While not binding, the findings may move the process along by making reasonable recommendations.
• Interest arbitration. A process used to resolve an impasse in negotiations where the parties submit the unresolved items to a neutral third party to render a binding decision.
• Privatization. When governmental employees are replaced with private sector workers through a contract with an outside employer for the purpose of reducing overall costs.
• Furlough. An involuntary, unpaid and temporary leave of absence from employment, recently used by governments to balance budgets without laying off employees.

Establishing a bargaining unit and the organizing campaign

• Appropriate bargaining unit. The group of employees determined by the NLRB to be an appropriate unit for collective bargaining purposes. After a bargaining unit is identified, the employees of that unit have the right to select their bargaining representative, usually a labor union.
• Community of interest. Criteria used by the NLRB to evaluate a group of employees and determine whether they constitute an appropriate bargaining including similarity of jobs, and wages & benefits, degree of contact and proximity, and common supervision.
• Globe doctrine.The policy set by the NLRB to help it determine the representation wishes of employees when establishing an appropriate bargaining unit. The board may use the secret ballot election process as a means of giving weight to the desires of a group of employees, such as a smaller craft group within a larger industrial group.
• Accretion. The practice of allowing the addition of new employees and jobs to existing bargaining units provided their work satisfies the same criteria of the original unit.
• Craft Unit. A bargaining unit composed exclusively of workers with a specific and recognized skill, such as electricians or plumbers.
• Departmental Unit Similar to a craft unit, a departmental unit is composed of all the members of one department in a larger organization.
• Residual Unit. Employees left unrepresented after the bulk of the employees are organized, such as janitors and sales people, may be entitled to separate representation by a residual unit.
• Remaining Unit. An employee group separate from the primary production and maintenance units in their job duties, such as professional, technical, guard, and clerical units.
• Craft Union. A labor union whose members primarily perform jobs of one particular skill.
• Industrial Union. A labor union whose membership is composed primarily of semiskilled or unskilled workers, such as automobile workers and steelworkers, who are organized on the basis of the product they produce. Usually all production and maintenance (not management) workers within an organization belong to the same industrial union.
• Business Agent. The full-time administrator of a local union paid to handle the negotiation and administration of the union contract as well as the daily operation of the union hiring hall.
• Steward. An on-the-job union representative who carries out the responsibilities of the union in the plant at the departmental level.
• Federation of Unions. The uniting of many national unions to increase union power and recognition. The federation serves as a national spokesperson for its members although it is not a union itself. Two federations in the United States are the AFL-CIO and the Change to Win Coalition.
• Change to Win. A new union federation of national unions dedicated to growing their membership through strategic organizational campaign and improving the living standards of workers.
• Union Organizer. A full-time, salaried staff member of a union who generally represents a national union who organizes work places to increase union membership.
• Organizing Drive. A movement initiated by dissatisfied employees or a union organizer to submit a representation petition to the NLRB and win a representation election, thus providing union certification and collective bargaining.
• Secret-ballot representation election. A private, confidential vote by employees, overseen by the NLRB, which allows employees to cast their vote for or against union representation confidentially without pressure or coercion from the union or employer.
• Salting. Members are encouraged by their union to seek employment at a nonunion company. Once hired, they promote unionization. The union may supplement their regular pay to provide equity with a “union” wage.
• Showing of Interest. The demonstration of employee support, usually in the form of petitions or authorization cards, that a union is required to compile before a representation election can be considered.
• Runoff Election. The successive election held when a representation election involving three or more choices results in no one choice receiving the majority vote. The choices receiving the most votes are again voted on until one receives the majority of the votes cast.
• Certification. The determination by the National Labor Relations Board that a union represents the employees’ free choice and therefore that the union can become the official bargaining agent for a bargaining unit.
• Voluntary Election. An employer recognizes a union as the bargaining agent of the employees without requiring a secret ballot election.
• Neutrality/Card-Check Recognition. The employer and union agree in advance before the union obtains cards signed by a majority of the employees that the parties will use a card check by a neutral third party as a means of determining majority support and the employer will voluntarily recognize the union if the card check shows majority support for a union.
• Gissel Doctrine. The Supreme Court decision that allows the use of authorization cards as a substitute for a certification election when an employer shows unfair labor practices and when the results of an election may be unreliable.
• Decertification Election. The process of removing a union as the certified representative of employees within a bargaining unit. A secret-ballot election is conducted by the NLRB to determine a majority opinion.
• Deauthorization Election. The bargaining unit members decide if they desire to nullify the union shop provision in their agreement, which must be passed by a majority of the bargaining unit members. Thus if a union loses a deauthorization election UD, the union still represents the employees in the bargaining unit and the rest of the collective bargaining agreement remains intact, but emloyees are not required to join the union.
• Exclusive Representation. Having been certified as the collective bargaining agent for a particular unit, the union has the legal right to bargain for all the employees within the unit, nonunion as well as union.

Negosiations Models, Strategies and Tactics

• 5 Ws. The who, where, when, what form of agreement, and how will proposals be made as agreed to in the ground rules.
• Ground Rules. The general procedures and policies that each party agrees to adhere to during negotiations. These are usually agreed to in writing before the negotiations and may include such items as the time, date, and location for the negotiating session.
• Posturing. The pattern established during the initial bargaining session in which each negotiating party demonstrates its willingness to negotiate, identifies its basic bargaining positions, and generally sets the tone of the negotiations.
• Packaging. A negotiation tactic of putting a few items together and allowing both sides to achieve gains on one or more items to establish trust and decrease the number of unresolved issues.
• Throwaway Items. A negotiating tactic in which a party introduces items of low priority to its side to trade for items of higher priority.
• Saving Face. Allowing negotiators to present the end product of a negotiation in the best light, with neither party publicizing individual wins or losses to ensure ratification of an agreement as well as the ability to ensure more positive relationships in the future.
• Batna. A negotiator’s best alternative course of action if no settlement is reached.
• Watna. A realistic assessment of the worst alternative to not reaching an agreement that affects what a party is willing to agree to in order not to reach an impasse.
• Power Balance. External factors that affect the relative strength of the parties and the outcome of the negotiations.
• Distributive Bargaining. A negotiation method described as a “win-lose” situation, in which resources are viewed as fixed and limited, and each side wants to maximize its share.
• Settlement Rage. In the negotiation of a specific issue, this is the difference between the resistance points of labor and management, also known as the zone of possible agreement, because anything outside of the range would be clearly unacceptable to one side or the other.
• Anchor. An opening offer, often a number, and not necessarily a realistic number, that can influence the parties’ assessment of the zone of possible agreement in the negotiation.
• Bracketing. The process of moving toward a middle point between the opening offers or brackets, which is the logical bargaining process.
• Resistance Point. The maximum or minimum beyond which a negotiator will not accept a proposal - a bottom line.
• Winner`s Curse. Negotiators who accept an offer too quickly and later experience remorse because they believe that (true or not) even though they left value on the table (gave too much or too little).
• Negotiation Norms. Social beliefs or attitudes that affect one’s behavior in a negotiation, such as a relational norm that values the relationship between the parties, a fairness norm that seeks consistency or equality, a reciprocity norm that reacts in kind to an action, and a good-faith norm that values integrity, honesty, and willingness to compromise.
• Framing. Presenting an issue to the other side in a negotiation in a way that is convincing and causes the other side to “see” the proposal in different light.
• Integrative Bargaining. A negotiation method in which both sides seek ways to integrate the interests of both sides into mutually agreeable options.
• Position Versus Interests. The specific demand a party makes at the bargaining table (position) as compared with the party’s underlying needs, desires, fears, or concerns (interest).
• Mutual Gains Option. Negotiation offers that include some items or interests sought by each of the parties, thus both sides realize some of their goals.
• Nickle and Diming Tactic. A last minute demand by one party made to take advantage of the other party when they are about to reach agreement.
• Tentative Agreement. In labor negotiations the agreements on issues reached at the table are only tentative agreements—that is subject to ratification by the bargaining unit members.

Negotiating a Collective Bargaining Agreement

• Mandatory Items. The items that must be bargained in good faith, if either party so requests, such as wages, hours, and benefits, based upon the Borg-Warner case that outlined categories of bargaining subjects.
• Union Security. The provisions of collective bargaining agreements that directly protect and benefit the labor organization (union), such as dues checkoff and union shops.
• Permissive Items. Those items not related to wages, benefits, working conditions, or other mandatory subjects that may be negotiated in collective bargaining if both parties agree; If one party refuses to negotiate a permissive item, the other party cannot claim bad-faith bargaining or declare an impasse in negotiations over the item.
• Severability Clause. A contract clause stating that any portion of a contract declared invalid by state or federal law shall be declared null and void while still holding the remainder of the contract valid.
• Strike. A work stoppage by a number of employees caused by a disagreement with management over certain issues such as contract negotiations, grievances, or unfair labor practices.
• Primary Strike. A strike called by a union against the direct employer of its members when a labor dispute exists.
• Economic Strike. An employee strike over the failure to negotiate economic issues such as wages, benefits, or other conditions of employment. During an economic strike, the employer is entitled to replace strikers permanently and need only reinstate those for whom it has vacant positions.
• Unfair Labour Practice Striker. A strike called over an employer’s action determined by law to be an unfair labor practice, such as employee discrimination because of union activity. Employers cannot hire permanent workers during a ULP strike.
• Rolling Strike. A strike technique used by unions that moves a strike against an employer from location to location so that hiring replacement workers becomes more difficult.
• Mackay Doctrine. A court decision rule that interprets the NLRA as allowing employers to replace striking workers with permanent workers unless it is determined that the strike was an unfair labor strike. Striking workers who apply for reinstatement may be placed on a waiting list and hired as jobs become available.
• Permanent Replacement Workers. Under the National Labor Relations Board, when workers are engaged in an economic strike, management can hire permanent replacements. After the strike, the striking workers cannot claim their jobs back.
• Picket Lines. A line or procession of union members or union supporters staging a public protest outside an employer concerning a labor dispute often due to failed contract talks.
• No-Strike, No-Lockout Provision. A contract clause restricting both the union’s ability to call a strike and management’s ability to stage a lockout.
• Mediation. The introduction of a neutral third party into a grievance situation or collective bargaining impasse. Although mediators have no decision-making powers, they use their skills and work actively to achieve a settlement that is mutually agreeable to both sides.
• Interest Arbitration. A process used to resolve an impasse in negotiations where the parties submit the unresolved items to a neutral third party to render a binding decision.
• Duty to Sign. The obligation of both parties to reduce to writing and sign any agreement reached through the collective bargaining process. Refusal to sign can be declared an unfair labor practice.
• Provisional Intent Test. When knowledgeable but un-involved parties read the draft of a collective bargaining agreement after it has been reached to determine whether the drafting accurately reflects the interests of the parties.
• Union Security Clause. A CBA provision that requires employees to be members in good standing of a union.
• Check-Off. A contract provision requiring that the employer deduct union dues directly from union employee paychecks. The collected dues are then deposited in the union treasury.
• Closed Shop. A union security arrangement that requires employers to hire only union members. Closed shops were generally made illegal under the TaftHartley Act.
• Open Shop. A form of union security in which the workers within a bargaining unit may decide whether to join a union. Those who choose not to join are not required to pay union dues or fees or amounts equal to dues or fees.
• Union Shop. A union security provision that all new employees must become union members in good standing.
• Agency Shop. A labor contract provision that requires employees to contribute a sum of money equal to union membership dues but does not require the employee to join the union. The employee benefits from collective bargaining by the union and in turn gives financial support to the union for negotiations, contract administration, and other actions.
• Right to Work. The federal law permitting states to prohibit agreements requiring membership in a labor organization as a condition of employment.
• Free Riders. Employees within a bargaining unit who choose not to join the union that bargains for an agreement for the unit. Although the employees receive all negotiated benefits, they pay no costs associated with the union.
• Cheap Riders. Employees within a bargaining unit who choose not to join the union that bargains for an agreement but are required to pay a fee to the union to provide their share of the costs associated with negotiations (usually 80 to 85 percent of the regular union dues).
• Reserved Rights. The generally accepted contention that all rights not specified in an agreement or shared with a union remain the unwritten or implied rights of management.
• Restricted Rights. Contract provisions that place specific limitations on areas generally considered management rights.
• Contract Bar. The general rule followed by the National Labor Relations Board stating that a current and valid labor contract can prevent another union from petitioning for an election and being certified as the exclusive representative for the term of the existing contract.
• Open Period. The first 30-day period in the last 90 days before the termination of a collective bargaining agreement during which employees can vote to change their bargaining agent.
• Insulted Period. The last 60 days before a collective bargaining agreement is due to expire in which the existing bargaining agent cannot be subject to an employee vote to change bargaining agents.

Wage and Salary Issues

• Pay for the Time Worked. Employee wage rate based on the time actually worked (hours, days, shifts, etc.).
• Pay Equity. A historic union doctrine of “equal pay for equal work” that provides one standard pay rate for each job and all employees who perform it.
• Pattern Bargaining. A collective bargaining practice in which a national industry or union strives to establish equal wages and benefits from several unions or employers in the same industry.
• Me-Too Agreements. Agreements that contain pay increases equal to that of another CBA or received by another group. The rationale is that if management can afford to increase pay for one group, it can for another; or one group is as worthy as another.
• Exempt. Employees that are not subject to the overtime provisions of the FLSA, including most executive, administrative, professional, and outside sales employees.
• Nonexempt. Employees who are subject to the overtime provisions of the FLSA and thus must be paid time and a half their normal rate of pay when they work more than 40 hours per week.
• Pyramiding. The payment of overtime on overtime that occurs if the same hours of work qualify for both daily and weekly overtime payment. Most contracts prohibit this type of payment.
• Prevailing Wage. The hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. Prevailing wages are established, by the Department of Labor & Industries, for each trade and occupation employed in the performance of public work.
• Standard Rate. The flat or hourly rate of pay established for each job classification or occupation within a plant or employer, effective for the duration of the collective bargaining agreement.
• Piece Rate System. A wage system in which employees receive a standard rate of pay per unit of output. The rate of pay is usually based on the average level of production, with bonus rates given on output units exceeding the average level.
• Deferred Wage Rate Increases. Wage rate increases that become effective on later dates as specified in a collective bar-gaining agreement.
• Front-End Loading. A deferred wage increase in which a larger proportion of the total increase occurs in the first year of a multiyear contract.
• Wage Re-opener. A collective bargaining provision, effective for the term of the contract, which provides for contract talks to be reopened only for the renegotiation of wage rates.
• Back-Loaded Contract. A multiyear contract that provides a lower wage adjustment in the first year with higher increases in later years.
• Cost-of-Living Adjustment. The negotiated compensation increase given an employee based on the percentage by which the cost of living has risen, usually measured by a change in the consumer price index (CPI).
• Front Sharing. A pay incentive system in which employees receive a share of the employer’s profits in addition to their regular wages. A precise formula specifying how profits will be distributed to employees is the heart of a profit-sharing plan.
• Variable Wage Formula. A public sector deferred wage increase that is indexed to the growth of future governmental tax revenues.
• Scanlon Plan. A group incentive plan designed by Joseph Scanlon in which greater production is achieved through increased efficiency, with the accrued savings being distributed among the workers and the employer.
• Concession Bargaining. Collectively bargained reductions in previously negotiated wages, benefits, or work rules, usually in exchange for management guaranteed employment levels during the term of a contract.
• Arena Bargaining. A process when management meets with representatives of all the bargaining units at one time to discuss difficult economic issues.
• Legacy Costs. Contract costs for retiree benefits increases in retirement and health care provided in earlier contracts.
• Productivity Theory. The negotiating position that employees should share in increased profits gained by the greater productivity achieved because of their efforts.
• Value Added Concept. The theory that wages should equal the contribution of labor to the final product.
• Ability to Pay. The financial position of a company and its ability to change its wage rates are general factors involved in negotiations. They are usually a reflection of company profits and will be a basis of a negotiator’s wage proposal.
• Job Evaluation. A systematic method of determining the worth of a job to an organization. This is usually accomplished by analysis of the internal job factors and comparison to the external job market.
• Wage Survey. The collection and appraisal of data from various sources used to determine the average salary for specified positions in the job market.
• Costing. The methods of determining the financial impact of a contract change, such as total annual cost, cost per employee per year, percentage of payroll, and cents per hour.
• Base Compensation. An employee’s general rate of pay per unit or hour, disregarding payments for items such as overtime, pension benefits, and bonuses.
• Roll-Up. The direct increase in the cost of benefits that results from a negotiated increase in wage rates, such as Social Security, overtime pay, and pensions.

Employee Benefits

• Employment Insurance. Established in 1935 and funded through payroll taxes paid by employers, the program is designed to provide compensation, after a brief waiting period, to those employees who have been laid off from employment. Recipients are expected to seek employment actively.
• Work Compensation. A program designed to provide employees with assured payment for medical expenses or lost income due to injury on the job.
• Pension Plan. The way a pension, which guarantees a monthly payment to a former employee during retirement, is structured.
• Defined Benefit Plan. An employer-sponsored retirement plan in which employee benefits are paid based on a formula using factors such as salary and duration of employment. Usually there are restrictions on when and how the plans can be accessed without penalties. The amount of the retirement is fixed and the employee knows the amount.
• Defined Contribution Plan. A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee. There are restrictions as to when and how the plans can be accessed without penalties. There is no way to know how much the plan will ultimately give the employee upon retiring. The amount contributed is fixed, but the benefit is not.
• Cash Balance Plan. A type of defined-benefit pension plan under which an employer credits a participant’s account with a set percentage of his or her yearly compensation plus interest. The investment performance of the fund does not affect the final benefits to be received by the participant upon retirement. Unlike the regular defined benefit plan, the cash balance plan is maintained on an individual account basis, much like a defined contribution plan.
• Employee Retirement Income Security Act (ERISA). The first comprehensive reform law passed to protect employee pensions. Additionally, it places strict regulations on private pension plans and protects the vested rights of employees’ beneficiaries.
• Pension Benefit Guaranteed Corporation (PBGC). Established within the Department of Labor to encourage voluntary employee pension continuance when changing employment by providing portability, the right of an employee to transfer taxfree pension benefits from one employer to another.
• Vesting. The process by which an employee accrues nonforfeitable rights over employer contributions that are made to the employee’s qualified retirement plan account. Generally, nonforfeitable rights accrue based on the number of years of service performed by the employee.
• Wage Employment Guarantee`s WEGs. A contract negotiation assuring employees a minimum amount of work or compensation during a specified amount of time.
• Escape Clause. A contract provision that allows either negotiating party to be released from a specific provision of a collective bargaining agreement, under certain conditions.
• Supplemental Unemployment Benefits (SUB) Plans. Plans that provide additional income to supplement state unemployment benefits to employees who are

laid off.

• Severance Pay. A lump sum or a dispersal of payments given to employees who are permanently separated from the company through no fault of their own.
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