Subcontracting Clauses in 

Major Collective Bargaining 

Agreements

Bulletin No. 1304

August 1961

U N ITE D S T A TE S D E P A R TM E N T O F LAB O R 

Arthur J. Goldberg, Secretary

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Price 30 cents

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Preface

The p revalen ce and ch a ra cteristics of subcontracting p rov ision s in m a jor collectiv e bargaining a g re e ­

m ents in effect in early 1959 are d escrib ed in this b u lletin. Am endm ents to the T aft-H artley A ct contained in 

the Labor-M anagem ent Reporting and D isclosu re A ct, 1959, 

p articu larly section 8(e) pertaining to f,hot ca rg o 11 a g re e ­

m ents, m ay have an effect in later yea rs on contract p r o ­

vision s. The study serv es as a benchm ark against which 

later studies m ight m easu re the changes resulting from 

law, as w ell as those resulting from collectiv e bargaining 

p ra ctices.

F or this study, 1, 687 collectiv e bargaining a g re e ­

m ents coverin g 1,000 or m ore w ork ers each w ere analyzed. 

These agreem ents applied to approxim ately 7. 5 m illion 

w ork ers, or alm ost half the estim ated covera ge of all c o llective bargaining agreem ents, exclu sive of those in the 

railroad and airlin e industries.

A ll agreem ents studied w ere part of the B ur e a u s file of current agreem ents m aintained fo r public 

and governm ental use under the p rovision s of the Labor 

Management R elations A ct of 1947, as am ended. The 

p rov ision s of agreem ents coverin g 1,000 or m ore w ork ers 

do not n e ce ssa rily re fle ct p olicy in sm aller collectiv e b a rgaining situations or in large or sm all unorganized firm s.

The study was conducted and this rep ort was p r e ­

pared by Leon E. Lunden, with the assistan ce of Henry S. 

R osenbloom , under the supervision of H arry P. Cohany 

in the Bureau*s D ivision of Wages and Industrial R elations.

in

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Contents

Page

P art I.

Scope and m eth od _________________________________________________ 2

Regulation of subcontracting ___________________________________ 3

C onstruction and other se rv ice s ------------------------------------------------ 5

Table:

P revalen ce of subcontracting lim itation clau ses in 

m ajor collectiv e bargaining agreem ents,

by industry, 1959 ___________________________________________ 4

P art II.

P roduction p ro ce ss or m ajor activity _________________________ 9

E nforcem ent of subcontracting provision s ____________________ 16

A ppendixes:

I. Subcontracting construction and other s e r v ic e s __________ 20

II. Subcontracting production p ro ce sse s or the m ajor

activity ____________________________________________________ 23

III. Subcontracting both production p ro ce sse s or the

m a jor activity and con stru ction and other

se rv ice s ____________________________________________________ 33

v

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Subcontracting Clauses in Major Collective

Bargaining ^Agreements

Part I

S u b c o n t r a c t in g , or contracting out, is a longstanding industrial practice. In the apparel and 

construction industries, it is an integral part of 

normal operations; in other industries, a decision 

whether it is more advantageous to have a particular job or type of work done by its own work force 

or by outsiders under contract is one which management is frequently called upon to make. The 

building trades and apparel unions have long maintained a substantial degree of control of the subcontracting system, but the procedures in these 

industries have no match among other organized 

industries.

Union attitudes towards subcontracting, in 

general, tend to stiffen when employment declines 

and when contracting out removes work that 

customarily “ belonged” in the bargaining unit. 

Not only are members, jobs at stake, but concern 

over union jurisdiction and the possibility that 

subcontracting may be used to evade or dilute the 

terms of the collective bargaining agreement are 

often present. The issue has also been sharpened 

by conflicts between industrial and building trades 

unions as to whose members are to be employed? 

on construction and maintenance work within 

industrial plants. As a result, some unions have, 

increasingly pressed for contract clauses governing 

subcontracting.

Management tends to resist negotiating such 

rules as an encroachment on its prerogatives. A 

few agreements explicitly include, in so-called 

“ management rights” clauses, a provision that 

decisions regarding subcontracting are among 

management's unrestricted prerogatives, but the 

low incidence of such statements is of little significance in view of the widespread reluctance on the 

part of management to define all management 

rights in a collective bargaining agreement.

As this study reveals, fewer than one out of 

four major agreements in effect in 1959 made any 

reference to subcontracting, and they handled the 

problems of preserving employment opportunities

and protecting agreement standards in diverse 

ways. A number of agreements established controls related directly to in-plant workers, such as 

barring subcontracting either when workers were 

on layoff or when letting the contract would 

cause layoffs or part-time work. Other agreements approached the job preservation goal by 

allowing subcontracting only when management 

had some compelling reason connected with skill 

and equipment requirements, production schedules, or cost considerations. In protecting inplant wages, hours, and working conditions, a 

significant number of clauses required the subcontractor either to comply with the prime 

employer's collective bargaining agreement or to 

sign a union contract himself. Some subcontracting controls, for example, those requiring prior 

consultation with the union, could serve both 

purposes, since they afford the union an opportunity to marshal arguments for keeping work in 

the plant or check on the status of the subcontractor to make sure that he was not undercutting 

union standards. Some clauses were so vague as 

to give little, if any, clue as to the nature of the 

understanding between the parties.

In the absence of a subcontracting clause in the 

agreement, does the employer have a free hand 

in subcontracting as he pleases? Some unions 

have disputed this, and arbitrators to whom such 

disputes have been referred differed in their 

decisions and reasons. Three lines of reasoning 

are discernible. In one camp are those who hold 

that if management's right to subcontract was to 

be abridged, a specific clause would have been 

written to that effect. This point of view was 

expressed in a recent decision as follows:

In summary, however, the arbitrator must find that a 

clear understanding exists in the field of labor-management 

relations that where the parties intend to prevent subcontracting such a specific provision is incorporated in 

contracts to limit management’s right in this matter.1

1 Minneapolis-Moline Co. v. United Automobile Workers, 33LA893.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
2

Other arbitrators have decided that subcontracting is barred when it would violate the recognition 

clause, the seniority clause, or any other general 

provision of the contract. For example, it is 

reasoned, when the company agrees with the union 

on wages, hours, and working conditions of employees in the bargaining unit, it is obligated not 

to undermine or seriously deplete the bargaining 

unit as established in the agreement’s recognition 

clause. In a case where the issue concerned management’s right to subcontract in order to achieve 

savings, the arbitrator’s decision against the company rested on these grounds:

. . . Accordingly the issue here is not the right of the 

company to remove one janitorial job. Rather the company is inevitably posing the question of its right under 

paragraph 51 [the management rights clause] to remove 

jobs from the bargaining unit whenever it can subcontract 

them at less than contract rate.

Such a broad interpretation of paragraph 51 would, in 

effect, include in this contract provision the right to emasculate the bargaining unit and is therefore in direct conflict 

with the recognition clause. Therefore, the company’s 

subcontracting of janitorial work cannot be sustained.2

Some recent arbitration decisions have reflected 

a third position, namely, that in the absence of a 

contract clause prohibiting subcontracting there 

is still an implied limit on subcontracting, but not 

an absolute prohibition. The circumstances in 

each case would determine whether subcontracting 

constituted a violation of the agreement. One 

arbitrator reasoned as follows:

I do not mean to suggest that past practice and recent 

negotiating history necessarily refute the union’s claim on 

behalf of an implied limitation on the company’s power to 

subcontract . . . Even without an explicit limitation 

some kind of implied limitation arises out of the very nature 

of a collective bargaining agreement. However, this history [of the company’s purchases of electric power] and the 

specific limitation on purchasing [electric] power to which 

it finally led should be borne in mind in giving consideration 

to the scope of any implied provision against contracting 

out which one may be inclined to draw.3

The arbitrator then went on to explain that as long 

as contracting out did not threaten the integrity 

of the bargaining unit, the particular circumstances, as in the case before him, governed, and 

the company could contract out.

Summarizing the opinions commonly expressed 

as to whether a subcontracting dispute is arbitrable 

in the absence of specific agreement, one arbitrator 

noted that “ The effort to squelch the issue at the

threshhold . . . has been pretty well settled in favor 

of arbitrability.” 4 In mid-1960, the U.S. Supreme 

Court upheld this contention in a case involving 

the United Steelworkers and the Warrior and 

Gulf Navigation Co.6 Reasoning that grievance 

and arbitration procedures in collective bargaining 

agreements effectuated congressional policy of 

promoting industrial peace, the Court concluded, 

first, that under section 301 of the Labor-Management Relations Act of 1947 an order to arbitrate 

could not be denied unless there was forceful evidence that a certain matter was to be excluded 

from arbitration, and, second, that “doubts should 

be resolved in favor of coverage.” The Court 

found no such forceful evidence in the case before 

it. On the other hand, there remained the issue 

of whether the collective bargaining agreement 

had been violated, on which the Court said:

.... There was, therefore, a dispute ‘as to the meaning 

and application of the provision of this agreement’ which 

the parties had agreed would be determined by arbitration.

The judiciary sits in these cases to bring into operation 

an arbitral process which substitutes a regime of peaceful 

settlement for the older regime of industrial conflict. 

Whether contracting out in the present case violated the 

agreement is the question. It is a question for the arbiter, 

not for the courts.

Scope and Method

For this study, the Bureau of Labor Statistics 

examined 1,687 major collective bargaining agreements covering 1,000 or more workers each, or 

virtually all agreements of this size in the United 

States exclusive of those in the railroad and airline industries.6 These agreements applied to 

approximately 7.5 million workers—almost half 

the number estimated to be under collective 

bargaining agreements except those in the railroad 

and airline industries. About 4.6 million workers 

were covered by 1,063 contracts in manufacturing 

and 2.9 million were covered by 624 contracts ill 

nonmanufacturing industries. All contracts were 

in effect at the beginning of 1959. *

a Gulf Oil Corp. y. Oil, Chemical and Atomic Workers, 33LA855. 

s Kennecott Copper Corp. v. International Brotherhood of Electrical Workers,

34LA763.

* United Automobile Workers v. Black-Clawson Co. 34LA215.

»363 U.S. 574.

« The Bureau does not maintain a file of railroad and airline agreements 

hence their omission from this study.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
3

For the purposes of analysis, provisions regulating subcontracting were classified into three 

categories: (1) those pertaining solely to the contracting out of construction, maintenance, and 

installation services; (2) those referring to the 

contracting out of part of the production process or 

of the major activity; and (3) those dealing with 

both types of subcontracting.7

A variety of contract provisions having certain 

features relevant to subcontracting were considered to be outside the scope of the study. For 

instance, clauses that banned converting a worker 

from an employee into a subcontractor (prevalent 

in the construction industry) were omitted,8 as 

were bans on “home work” (apparel). Other 

regulatory clauses excluded from the study were 

those relating to concession and leasing arrangements in retail establishments by manufacturers 

or distributors, and to commission work, frequently practiced, for example, in the cleaning and 

dyeing industry.®

Regulation of Subcontracting

Among the 1,687 agreements studied, there 

were 378 with limitations on subcontracting, only 

4 of which prohibited the practice outright. (See 

table.) Five did not specify the nature of the 

restriction. The remaining 369 agreements permitted management to subcontract, subject to 

certain conditions or limitations. On the other 

hand, 1,309 agreements made no reference to 

limiting subcontracting, among them were 4 that 

specifically included contracting out among 

management's unrestricted prerogatives.

One of the four clauses expressly prohibiting 

contracting out was stated as follows:

No contracting within the firm or subcontracting between firms shall be permitted.

The following excerpts from textile and paper 

products agreements illustrate how the assertion 

of management's unlimited right is treated:

It is recognized and agreed that the management of the 

plant and the direction of the working force is vested in 

the company. Among the rights and responsibilities 

which shall continue to be vested in the company, but not 

intended as a wholly exclusive list of them, shall be: The 

right to increase or decrease operations; to remove or 

install machinery; to determine schedules of production;

. . . and to contract work in its discretion.

♦ * *

It is understood that the company may employ outside 

contractors to perform work in the mill.

Of the 369 agreements with specific limitations, 

232 were concerned with subcontracting of part 

of the production process or the major activity of 

the employer, 51 referred solely to the contracting 

out of construction, maintenance, and installation 

services, and 86 regulated subcontracting in both 

areas. Most of the 318 clauses which regulated 

subcontracting of either the production process or 

the major activity were found in nonmanufacturing industries, primarily construction (79), 

electric and gas utilities (44), transportation (23), 

and communications (20). However, clauses also 

appeared in the apparel (42), transportation equipment (17), and petroleum refining (12) industries.

The 137 clauses concerned with construction, 

maintenance, and installation services were more 

prevalent in manufacturing than in nonmanufacturing, appearing mainly in transportation 

equipment (20) and petroleum refining (10). 

The transportation equipment agreements, including several very large contracts, covered 

approximately 640,000 workers, or slightly more 

than half of the 1.2 million workers covered by 

agreements with construction subcontracting 

clauses. Electric and gas utilities, alone among

7 Thirty-eight agreements permitting subcontracting under certain conditions were so vague that categorizing them into the three groups noted above 

raised particular difficulties. Allocation was achieved by examining the 

makeup of the bargaining unit as well as the practices of the industry as 

reflected in other clauses.

A number of agreements in petroleum refining, electric and gas utilities, and 

communications specifically mentioned construction and maintenance subcontracting, but were classified as “ production” or “ major activity” subcontracting, since construction and maintenance of oil and gas pipelines and 

electric power and communications networks were considered an integral 

part of the production process or major activity.

8 Prohibitions against members becoming subcontractors were also noted 

in a small number of union constitutions, usually those of construction 

unions. Typical is the following section from the Carpenters* constitution:

“ No member of the United Brotherhood shall lump, subcontract or work 

at piecework for any owner, builder, contractor, manufacturer, or employer. 

For a violation of this paragraph or any part of it the member shall be fined 

not less than $10 or be expelled.”

Other unions having similar constitutional bans include the Plumbers, 

Journeymen Stone Cutters, Asbestos Workers, Boilermakers, Bricklayers, 

Painters, and Jewelry Workers.

* Another approach to subcontracting outside the scope of this study was 

letters of intent that set forth understanding and company policy in this 

area, discussed by Donald A. Crawford and Leonard Sayles in the Conference

Proceedings on Industrial Relations in the 1960's—Problems and Prospects to 

be published soon by the Wharton School of Finance and Commerce. As 

an example, Crawford cited at length the General Motors letter to its general 

managers on subcontracting maintenance and certain tool and die work. 

He also noted that letters of intent often represent a voluntary restriction 

by management on its own freedom to contract out, which sometimes goes 

beyond arbitration awards or contract language negotiated by union and 

management. According to Professor Sayles, letters of intent are “ pervasive.”

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
4

P r e v a l e n c e o f Su b c o n t r a c t in g L im it a t io n C l a u s e s in M a j o r C o l l e c t iv e B a r g a in in g A g r e e m e n t s , b y I n d u s t r y ,

1959

Industry

Number

studied

Conditions or limitations on subcontracting 

of—

Subcontracting specifically 

prohibited

Nature of 

restrictions 

unspecified

No reference 

to subconProduction tracting 1 *

process or 

major 

activity

Construction, 

maintenance, 

and installation services

Both production process 

and services

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

Agreements

Workers

(thousands)

All industries.............................................................. 1,687 7,477.3 232 1,327.6 51 434.1 86 783.9 4 10.4 5 32.1 1.309 4,889.3

Manufacturing........................................................... 1,063 4,555.3 74 406.2 49 425.0 54 661.9 3 9.0 1 24.0 882 3,029.3

Ordnance and accessories___________________ 15 39.4 1 1.1 14 38.3

Food and kindred products_________________ 120 405.8 7 30.2 3 5.9 4 64.0 1 6.0 105 299.8

Tobacco manufactures______________________ 11 27.6 U 27.6

Textile mill products _____________________ 33 78.4 4 10.6 1 8.0 28 59.8

Apparel and other finished products_________ 45 464.1 33 296.3 9 153.2 3 14.6

Lumber and wood products, except furniture.. 13 37.2 1 4.0 2 3.8 1 1.5 9 28! 0 Furniture and fiYtnrAs _ _ _ _ _ _ 20 32.1 1 2.5 1 1.5 18 28.1

Paper and allied products.. ________________ 54 118.0 1 1.6 2 5.2 1 1.5 50 109! 8 Printing pnhlishipir, and allied industries 31 62.2 31 62.2

Chemicals and allied products______________ 57 113.6 1 1.2 4 5.0 5 10.4 47 97.1

Petroleum refining and related industries_____ 23 63.8 2 5.7 10 27.0 11 31.1

Rubber and miscellaneous plastic products___ 24 128.1 1 3.1 6 70.2 3 1 24.0 16 30.8

Leather and leather products________________ 20 62.5 6 14.8 14 47.7

Stone, clay, and glass products______________ 38 100.8 5 19.6 33 81.2

Primarv metal industries___________________ 124 724.8 1 1.0 7 32.8 1 1.2 115 689.8

Fabricated-metal products ________________ 52 146.4 3 6.4 2 4.0 1 1.4 46 134.7

Machinery, except electrical_________________ 117 283.9 2 2.4 7 10.9 2 4.2 106 266. &

Electrical machinery, equipment, and supplies 100 438.3 1 5.2 2 2.3 3 4.1 94 426.7

Transportation equipment_____ ___________ 127 1,152.2 6 14.3 9 260.2 11 379.8 101 498.0

Instruments and related products ________ 24 54.2 2 2.7 3 7.7 19 43.8

Miscellaneous manufacturing industries ____ 15 22.5 2 4.5 1 2.3 1 1.5 11 14! 2

Nonmanufacturing.................................................... 624 2,922.0 158 921.4 2 9.1 32 122.1 1 1.4 4 8.1 427 1,860.0

Mining, crude petroleum, and natural gas production ________________________________ 17 252.7 3 5.9 14 246.8

Transportation3 _________________________ 95 573.2 19 228.3 4 12.4 72 332.6

Communications _________________________ 79 558.1 13 130.1 7 57.4 59 370.6

Utilities: Electric and gas___________________ 78 200.5 27 60.5 2 9.1 17 44.5 32 86.5

Wholesale trade____________________________ 12 21.6 3 3.5 9 18.1

Retail trade _____________________________ 92 245.1 9 38.9 83 206.2

Hotels and restaurants __________________ 36 176.8 36 176.8

Services.___________________________________ 55 184.9 7 13.7 1 1.9 1 1.4 46 168.0

Construction __________ ___ ___ ________ 155 701.9 79 444.1 4 4 8.1 72 249.7

Miscellaneous nonmanufacturing industries ... 5 7.4 1 2.5 4 4.9

1 Includes 4 agreements that specifically include subcontracting among

unrestricted management prerogatives.

3 A company wide agreement that delegates authority to negotiate on subcontracting to the local plant level.

3 Excludes railroad and airline industries.

4 Agreements disallow subcontracting of labor services only and working 

for a lump sum payment for a specific job, but do not restrict subcontracting 

that includes both labor services and materials.

Note: Because of rounding, sums of individual items may not equal 

totals.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
5

the nonmanufacturing industries, had a significant concentration of clauses in this area (19).

Affiliates of 56 national and international 

unions were party to major agreements which 

regulated subcontracting. The three most active 

in writing such provisions were the International 

Brothernood of Teamsters (42), the International 

Brotherhood of Electrical Workers (34), and the 

International Ladies’ Garment Workers’ Union 

(34). Other frequent negotiators were the United 

Automobile Workers (20), Hod Carriers (17), 

Carpenters (15), Oil, Chemical and Atomic 

Workers (14), Steelworkers (15), Communication 

Workers (12), Operating Engineers (10), and 

Machinists (10). Although the Amalgamated 

Clothing Workers held only eight subcontracting 

agreements, one of these—with the Clothing 

Manufacturers Association of the United States 

of America—was a national agreement in the 

men’s and boys’ clothing industry covering 

150,000 workers.

Construction and Other Services

Subcontracting provisions concerned with construction, maintenance, and installation services 

stressed preservation of job opportunities by 

setting prior conditions for management to meet, 

in contrast to the protection of contract standards 

treatment used, as will be noted in part II of this 

study, in construction and apparel contracts. 

The more common provisions dealt with layoff, 

the union voice in the subcontracting decision, 

and skill and equipment requirements. 10

Employment Effects. A substantial number of 

agreements prohibited subcontracting when qualified in-plant workers were already on layoff or on 

part time, or when layoff or part time would 

result. Under a few clauses, in-plant workers 

must be fully supplied with work for subcontracting to be permissible. Several provisions allowed 

the company to exercise its subcontracting right 

provided that it would use its best effort to place 

its employees who are laid off or on part time 

with the subcontractor. In stone, clay, and glass 

products and in chemicals, clauses including 

this proviso were identical in language; the remaining clauses, all in petroleum refining, were 

similar in content. Examples of both are presented above. Note that, in both, the prime

employer’s liability is limited to “ qualified” 

employees:

If a contract is let by the company for any repairs or 

construction work, the company will attempt fairly to 

employ directly or, if practical, through any contractor, 

as many idle employees as is possible, provided they are 

qualified for the work available, in making repairs to 

buildings, tanks and equipment, or in building new 

structures . . .

* * *

When contract work is necessary, the employer will 

use its best efforts with the contractor to secure employment on the contract work for former employees laid 

off not more than 180 days (but not including discharged 

employees) of the employer who are qualified and who 

may be available for such work.

In a few clauses, mainly found in Steelworker 

agreements, management agreed to a general policy 

of giving preference for maintenance and construction work to the bargaining unit, as for example, 

in the following electrical machinery provision:

Outside Contract of Work in Plants. The employees 

covered by this agreement shall be given preference for 

maintenance and construction work in the plant to the 

fullest extent practicable.

Upgrading of jobs to keep work in the plant was 

mentioned in one agreement:

(1) So far as possible, with the work force available, 

minor construction and all maintenance jobs will be 

performed by [the company’s] work force.

(2) So long as it is consistent with maintaining good 

operations, management will attempt to upgrade craft 

and trade jobs to perform the work as mentioned in the 

above paragraph.

Notice to Union. Numerous clauses allowed the 

union to participate in the making of subcontracting decisions. Only one agreement banned subcontracting without union approval and one called 

for notice after a contract had already been let; 

the largest number required simply that the union 

be notified or consulted. Some did not specify 

whether notice had to be given before or after the 

decision; these were found in the chemical, glass, 

machinery, electrical machinery, transportation 

equipment, communications, and utilities agreements. Typical of the clauses where the timing 

of notice was not explicit were the following 

machinery and electrical machinery provisions:

If it shall become necessary to use outside contractors 

to perform work in the plant normally performed by our 

employees, the union shall be notified and given the 

reason why [the company] is required to have outside 

contractors enter the plant.

1® See samples in appendix I.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6

* * *

. . . The company agrees to keep the union informed 

of the status and scope of its subcontracting program.

By far the larger number of clauses, however, 

required advance notice of subcontracting. Fully 

one-third of the agreements containing this proviso 

were concentrated in the transportation equipment industry, from which the following examples 

are cited:

When plant maintenance or construction work is let to 

outside contractors, the corporation will, before the work 

is started in the plant, give reasonable notice to the union 

of the nature of the work and the reason for such action. 

* * *

Before bringing outside general contractors into the 

plant for changeover and other construction work, the 

company will discuss the matter with the shop committee 

and inform them of the nature of the work expected to be 

performed.

Most clauses defined the union body to be notified. Typically they were the shop committee, 

union scale committee, union executive board, 

chief department steward and the union incentive 

committee, business managers of the union, or the 

workmen’s committee. Two clauses provided for 

expansion of standing labor-management committees when subcontracting was to be discussed. 

One required that supervisors directly involved in 

the decisionmaking participate in the discussion 

along with the industrial relations manager; the 

other gave the union the right to include its 

grievance committee along with its department 

steward in subcontracting discussions.

Only one agreement required that the prior 

notice be in writing:

. . . Before awarding to outsiders contracts for major 

alterations to buildings or equipment, or contracts for new 

buildings or equipment, the company will notify the union 

in writing.

Three agreements specified length of notice the 

company must give the union before letting a 

contract. One required 10 days’ notice, a second 

established a regular weekly review of “ the circumstances involved in the propriety of awarding 

particular contracts,” and the third called for 

quarterly meetings to discuss such matters.

Overtime and Other Special Rules. In three situations, the use of subcontractors was discouraged 

by requiring the company to pay overtime, for a

“ sixth day” or a “48-hour week,” to inplant workers with the same skills as the subcontractor’s 

employees, as for example, in the following food 

agreement:

Mechanical workers shall be scheduled on a 48-hour or 

more week as long as an outside contractor is in the plant 

doing work of a mechanical nature except for permissible 

contract work set forth below . . .

Other clauses called for overtime for corresponding 

in-plant workers when the subcontractor’s crew 

worked overtime:

When outside contractors are required to perform work 

in the plant on an overtime basis, employees who customarily perform the same work will be given equal opportunity for overtime work except for the following: 

(a) new construction, (b) erection of large fixtures built 

outside the plant, (c) work which of necessity must be 

performed during nonoperating hours.

Exclusions similar to those indicated in the 

latter clause were found in all agreements that 

granted overtime to in-plant workers when the 

subcontractor’s crew was on overtime.

Some clauses, whose meaning is not explicit, 

created a general commitment on the part of the 

employer to take “ worker interests” into account. 

A majority of such clauses were included in the 

management prerogative section of the agreement, 

as, for example, in this electrical machinery 

agreement:

The union recognizes that there are functions, powers, 

and authorities that belong solely to the company, prominent among which, but by no means wholly inclusive, are 

the functions of introducing new or improved production 

methods or equipment . . . as well as the assignment of 

work to outside contractors after due consideration by the 

company to the interests of the regular employees.

Of the clauses which defined worker interests, 

only one required the company to provide “ full 

information to the union committee regarding 

reasons for assignment of work to outside 

contractors.”

Three clauses addressed themselves to the relationship between employees of the prime employer 

and those of the subcontractor. In one glass 

agreement, company maintenance employees were 

allowed to refuse an assignment which would require them to work with the subcontractor’s 

employees. Another glass agreement made the 

same allowance, but recognized that at times such 

work might be “ desirable” from a company viewDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
7

point, in which case there would be negotiations 

for a “ temporary adjusted rate” :

When construction work is being performed by outside 

contractors, company employees are not to be required to 

work in conjunction with contractors’ employees.

In situations where the company considers it desirable 

to employ its own maintenance employees in construction 

work in conjunction with contractors’ employees, the union 

and the company are to negotiate and agree as to whether 

or not such employees are to be paid at a temporary adjusted rate.

A number of provisions, distributed primarily 

among the transportation equipment, chemicals, 

food, and glass industries, allowed subcontracting 

where either specialized equipment, specialized 

skills, or both, were needed. The following machinery clause is an example:

The company recognizes that one of its responsibilities 

is to keep the present work force working at least the hours 

in the regularly scheduled week whenever possible, and 

with this in mind, the company will not subcontract any 

work usually assigned to regular employees, unless (1) 

special skill or equipment is unavailable . . .

Most clauses in this category, however, did not 

refer to “ special skill and equipment.” Skills, 

for instance, were generally described as available, 

sufficient, qualified, capable, able to do, experienced, proper. Similarly, equipment was defined 

as necessary, available, appropriate, capable, and 

proper and sufficient. For example:

So long as appropriate equipment and qualified employees in this bargaining unit are available and not otherwise engaged in current work, the company will not contract out repair or maintenance work . . .

* * *

It is agreed that whenever proper equipment and employees are available, the company will not subcontract . . .

* * *

The corporation agrees, as a policy, to refrain from having maintenance, installation, and construction work done 

in its plants by the employees of others, or from sending 

such work to outside concerns, when there are employees 

and facilities in the plants capable of doing this work . . .

In the following clause, the adequacy of supervision is also a factor:

This clause is not intended to restrict the company in 

its right to let contracts . . . when it feels it necessary or 

expedient to do so, such as not having the necessary 

equipment or supervision . . .

Several agreements established limitations 

based upon production and cost considerations. 

Some prohibited subcontracting except during

peak periods or emergencies, while the remainder 

were concerned with the lack of room for additional help, the inability to meet an established 

delivery date, and maintaining good customer and 

public relations. Additional provisions allowed 

subcontracting where it represented savings in 

cost or time or improved the efficiency of the 

operations.

As previously noted, a number of the subcontracting provisions for construction, maintenance, and installation work were concerned with 

safeguards for the in-plant workers' wages, hours, 

and conditions. Among these, a few required 

the subcontractor to be under union contract, 

a few demanded compliance with the prime 

employer's agreement, and two prohibited contracting out when the purpose was evasion of 

the prime employer's contract.

Several provisions required the subcontractor 

to employ union labor and to use union-made 

material. On the other hand, one utility agreement specified that the employees of subcontractors did not have to be union members. 

Another clause compelled the subcontractor to 

live up to general union standards, and 15—the 

largest concentration of provisions attempting 

to protect work standards—provided that subcontractors' employees must receive either prevailing area wages or not less than the contract 

minimums, as illustrated in the following utility 

contract:

Where the [company] enters into contracts for the 

performance of work which requires the employment of 

laborers and mechanics in the construction, alteration, 

maintenance, or repair of buildings, dams, locks, or other 

projects, such contracts shall contain a provision that 

not less than prevailing rates of pay for work of a similar 

nature prevailing in the vicinity shall be paid to such 

employees of the contractor, which rates shall not be less 

than the rates paid by [the company] . . . to its employees 

doing similar work.

Other contracts took the opposite stand, 

specifically stating that the prime employer would 

not be responsible for the wages, hours, and working conditions established by its subcontractors:

The company will not undertake to regulate the 

conditions of employment which may prevail under 

outside contracts or subcontracts covering such construction, building, or maintenance.

Finally, a few petroleum refining agreements 

protected the seniority of any in-plant employee

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
8

who might work for one of his employer’s subcontractors while on temporary leave of absence:

Employees granted leaves of absence to work for a 

contractor performing services for the employer shall 

retain their seniority on the same basis as though they 

had continued to work for the employer. H

Major Versus Routine Services. A number of 

agreements differentiated between major or new 

construction, maintenance, and repair work and 

that which was ‘* normal” or “routine.” Typically, 

such clauses reserved normal work for in-plant 

workers and allowed major or new construction 

and repair to be contracted out:

So far as possible with the work force available, minor 

construction and all maintenance jobs will be performed 

by [the company’s] work force.

♦ * *

No job shall be let to outside contractors, other than 

major construction and major repair, and fabrication, 

installation, and use of patented or highly specialized 

equipment . . .

* * *

The company shall have the right to contract with 

outside contractors for maintenance, construction, and 

repair work when in the judgment of the company such 

services are required . . . The company will not contract 

routine maintenance work when sufficient qualified 

employees are available on the payroll to do the work . . .

This policy of allocating the work according to 

whether it was major or normal and routine 

parallels jurisdictional agreements worked out 

between the building trades and industrial unions 

in several local situations.12

11 See sample in appendix HI.

* 2 Such agreements were reached between the building trades and the 

United Automobile Workers in Detroit, several industrial unions in Connecticut, and the Steelworkers in Youngstown, Ohio.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
9

Subcontracting Clauses in Major Collective

Bargaining Agreements

Part II

Production Process or Major Activity

Provisions regulating subcontracting of any 

part of the production processes or major activity 

of the employer were found in 318 of the 378 

major agreements having subcontracting clauses. 

(See p. 582, June issue.) The construction and 

apparel industries, with a long history of such 

arrangements, have worked out elaborate clauses 

controlling contracting out.

Construction. In the construction industry, subcontracting is generally accepted by unions and 

employers as a normal condition of work. Few 

provisions were found that attempted to preserve 

job opportunities by creating certain conditions 

under which management could contract out. 

For example, only one clause prohibited subcontracting if it would result in layoff, and a 

very small number required the company to 

notify the union in advance of subcontracting 

or to subcontract only after receiving union 

approval. On the other hand, the protection of 

contract standards was of major interest. The 

most common restrictions required the subcontractor to comply with the terms of the prime 

employer's contract, to have a union agreement 

of his own, or to employ union labor and use 

union-made material.

The single most frequent requirement, found 

in more than 50 major contracts, called for the 

subcontractor to comply with all the terms and 

conditions of the prime employer's agreement. 

This provision “ blankets in" the subcontractor, 

no matter what project he works on in the local 

union's jurisdiction or which prime employer he 

works for. Here are two examples of how such 

contract-compliance clauses are worded:

Any subcontractor on the site shall be covered by the 

conditions of this agreement.

* * *

The terms and conditions of this agreement, insofar as 

it affects . . . the individual employer, shall apply equally 

to any subcontractor under the control of or working 

under contract with such individual employer on any 

work covered by this agreement, and said subcontractor 

with respect to such work shall be considered the same 

as an individual employer covered hereby.

A number of clauses in this category required 

written guarantees of subcontractor compliance. 

Some stipulated that the subcontractor must 

either sign the prime employer's collective bargaining agreement or a “ short form" contract 

(a pledge of compliance), while others obligated 

the prime employer to insert a clause into the 

subcontract requiring the subcontractor to comply with the collective bargaining contract. Both 

are illustrated below:

Any employer or shop signed to this agreement shall 

not sublet to or from any . . . company . . . unless the 

work to be performed is performed under the terms of 

this contract, and the employer whose employees perform 

such work is either signatory to this contract or has 

signed a short form contract which requires acceptance 

of and being bound by all the terms and conditions of 

this contract.

* * *

That if the contractors, parties hereto, shall subcontract work as defined herein, provision shall be made in 

said subcontract for the observance by said subcontractors 

of the terms of this agreement.

While the great majority of these compliance 

clauses required rigid observance of the prime employer's contract, a smaller number established the 

prime employer's labor agreement only as a 

standard below which wages, hours, or working 

conditions for the subcontractor's employees could 

not fall. Some contracts required the subcontractor to grant “ equivalent" terms or conditions 

“no Jess than" those of the prime employer. In 

other provisions, compliance with the wage schedule was required, while the prime employer was 

duty bound to try to achieve observance of the

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
10

rest of the contract. Illustrated below is a provision requiring the subcontractor to comply with 

terms “ no less than” those in the prime employer’s 

agreement:

If the employers, parties hereto, subcontract jobsite 

work, provision shall be made in such subcontract for the 

compliance by the subcontractor with terms not less than 

those contained herein.

Closely allied to this approach was a second 

large group of construction industry contracts 

which required the subcontractor to be under 

agreement with the same local, with another local 

of the same international union, with a recognized 

building trades union, or with an AFL-CIO affiliate. Such clauses are further discussed under 

the following section covering the apparel industries.

Provisions requiring the subcontractor to employ union labor or use union-made materials, or 

both, comprised a third group of limitations upon 

construction industry subcontracting. Among 

clauses specifying the use of union labor, one 

simply stated that the subcontractor must employ 

union members; others tailored their language to 

fit the particular crafts involved; and in one instance, the subcontractor agreed to hire at least 

75 percent of his workers through the unions 

hiring hall. In its simplest form, the union labor 

limitation read as follows:

A member of the union shall be employed on all subcontracts made by the general contractor or by the successor or assign of the general contractor on work where 

the services of an engineer, apprentice engineer, foreman, 

oiler, or mechanic is necessary.

Those provisions which required the use of 

union-made material—so-called “ hot cargo” type 

clauses—were designed to facilitate mutual aid 

among unions in maintaining union standards. Although such clauses were banned by the LaborManagement Reporting and Disclosure Act of 

1959, certain exceptions were written into the act 

for the construction and apparel industries.13 In 

marked contrast to previously cited clauses, those 

attempting to ban the use of nonunion materials 

were almost identically phrased. Such familiar 

terms as “ nonunion” or “ unfair” materials were 

not used; uniformly, the clauses merely requested 

the employers to make “ every reasonable effort” 

to use materials that would not cause “ discord or 

disturbance” on the job, as in this provision:

The contractors and their subcontractors performing 

work covered by the terms of this agreement on a project

shall have freedom of choice in the purchase of materials, 

supplies, and equipment, save and except that every reasonable effort shall be made by these contractors and their 

subcontractors performing such work on the project to refrain from the use of materials, supplies, or equipment 

which use shall tend to cause any discord or disturbance 

on the project.

There was a scattering of various other restrictions in construction industry clauses. A few 

obligated the subcontractor to register with the 

union or the employers’ association (a limitation 

also common in the apparel industry); others required that prevailing area wage rates be paid the 

subcontractor’s workers; some directed the prime 

employer to protect the wages and other standards 

of the subcontractor’s workers (also prevalent in 

the apparel industry); and one prohibited subcontracting if its purpose was evasion of the terms 

of the prime employer’s labor contract.

In one construction agreement a subcontractor 

was prohibited from contracting out any part of 

his subcontract. Another clause provided that, 

with several exceptions concerning certain kinds 

of work, the prime employer could subcontract 

only to one subcontractor—a provision somewhat 

similar to apparel agreements which confine a 

prime employer to his registered subcontractors.

13 The Labor-Management Reporting and Disclosure Act of 1959 added the 

following subsection to section 8 of the National Labor Relations Act, as 

amended:

(e) It shall be an unfair labor practice for any labor organization mid any 

employer to enter into any contract or agreement, express or implied, whereby 

such employer ceases or refrains or agrees to cease or refrain from handling, 

using, selling, transporting or otherwise dealing in any of the products of any 

other employer, or to cease doing business with any other person, and any 

contract or agreement entered into heretofore or hereafter containing such an 

agreement shall be to such extent unenfordble and void: Provided, That 

nothing in this subsection (e) shall apply to an agreement between a labor 

organization and an employer in the construction industry relating to the 

contracting or subcontracting of work to be done at the site of the construction, alteration, painting, or repair of a building, structure, or other w ork: 

Provided further, That for the purposes of this subsection (e) and section 8(b) 

(4) (B) the terms “ any employer,” “ any person engaged in commerce or an 

industry affecting commerce,” and “ any person” when used in relation to the 

terms “ any other producer, processor, or manufacturer,” “ any other employer,” or “ any other person” shall not include persons in the relation of 

a jobber, manufacturer, contractor, or subcontractor working on the goods or 

premises of the jobber or manufacturer or performing parts of an integrated 

process of production in the apparel and clothing industry: Provided further,

That nothing in this act shall prohibit the enforcement of any agreement 

which is within the foregoing exception.

Virtually all agreements used in this study were negotiated prior to the 

passage of the Labor-Management Reporting and Disclosure Act, September 

1959.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
11

Apparel. As in the construction industry, contracting out is well integrated into the normal 

operations of the apparel industries. The degree 

of contracting out in the latter industries ranges 

from certain specialized operations (e.g., making 

canvas coat fronts) to the entire manufacturing 

process. The regular (“ inside” ) shop normally 

performs all manufacturing operations, but it may 

use contractors during peak periods or for specialized operations. Other manufacturers could not 

operate without subcontractors. Contractors sell 

their services to the manufacturers and, through the 

process of industry-union control, are “ attached” 

to one or more manufacturers or they may pick 

up work where they find it. The ramifications of 

the contracting-out system in apparel industries 

can not be adequately described through an 

analysis of collective bargaining agreements; this 

article, therefore, attempts to highlight those elements of contractual regulation which may have 

meaning to other industries.

Multiple unionism does not exist in any branch 

of the apparel industry where subcontracting is 

common; hence, aside from insuring that work 

will go to a union shop, the loss of employment 

opportunities for members of the union is no longer 

a significant factor in subcontracting regulations. 

However, the unions are concerned with preserving 

work for inside employees. Otherwise, the major 

restrictions found in apparel industry agreements 

were directed at protecting contract standards. 

These included registration of subcontractors, 

wage guarantees for the subcontractor’s employees, 

and “ struck work” provisions.

A large number of apparel industry provisions 

required that inside employees be “ fully supplied 

with work,” “ fully employed,” or “ fully and substantially employed” before the employer could 

subcontract. Other provisions prohibited subcontracting if it would cause layoff or if the inside 

workers were already on layoff. Exceptions from 

the “ fully supplied” requirement, noted in a few 

agreements, were situations in which (a) the prime 

employer could prove that he was not at fault for 

any slack work period that subsequently developed 

while the subcontractor continued to be fully employed and (b) the subcontracted work differed 

from the kind being done in the plant.

To stabilize industry conditions, several multiemployer agreements provided that, dining slow

periods, the available work was to be shared between the employees of the contractor and those 

of the prime employer. Some protected “ permanent” or “ registered” subcontractors by requiring that they be fully supplied with work before the 

prime employer could contract out to additional 

contractors.

A member of the association who employs contractors 

exclusively working for him shall share work with the 

contractors during slow periods of employment. Should 

a member of the association employ contractors who are 

not exclusively working for him, the union and the association shall decide upon the percentage of work such contractors shall receive from the member of the association 

during the slow periods of employment.

* * *

No work shall be given by such [employer] to any other 

contractor than those so registered unless and until both 

the employees of the [employer’s] factory and those of the 

registered contractors are fully employed ....

In establishing the method by which work should 

be divided between inside and outside shops, two 

different plans were generally used: a “ percentage” 

plan (alluded to in the second preceding clause) 

and one—more prevalent—based upon the number 

of machine operators employed in the inside and 

outside shops. Examples of the two methods are:

Where the employer maintains an inside shop and also 

gives work to be done in contracting shops, then and in 

that event, when slack sets in, the work to be sent to the 

contracting shop shall be the same percentage of the total 

work done as prevailed during the busy season, and such 

work shall be distributed substantially equally among the 

contractors permanently registered. The principle of 

equal division between the inside and outside shops shall 

not apply in those situations where the type of work 

regularly performed in inside shops differs substantially 

from the type of work regularly performed in outside 

shops.

* * *

A member of the association who maintains an inside 

shop and who deals with and gives work to contractors 

who employ workers in the crafts covered by this agreement shall, when there is insufficient work, distribute his 

work on the basis of the number of machine operators 

employed, equitably to and among his inside shop and to 

such permanent contractors designated by him as work 

exclusively for him, and to such other permanent contractors hereafter designated by him, with due regard to the 

ability of the contractors and the workers to produce and 

perform.

Besides these “ full work” and “ work sharing” 

provisions, there were a number of other restrictions scattered among the apparel contracts that

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
12

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 

one. If the union fails to furnish a union contractor satisfactory 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 

producei

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.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
13

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.14 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 declaied 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- *

** See footnote 13.

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.

♦ * *

The company agrees that it will not contract work out 

to other parties which is not customarily contracted out 

in a manner that will currently and directly result in a 

layoff or part-time work for present employees.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
14

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.15

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

15 See part I, p. 4, for illustrations.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
15

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 

utility clause:

It is the policy of the company not to employ outside 

contractors for any work ordinarily and customarily done 

by its regular employees, and the company agrees that 

no such . . . work will be let to outside contractors 

except [where] such jobs cannot be done in the time 

required for completion by regular employees because of 

volume of work. . . .

The largest number of clauses referring to production criteria provided that subcontracting 

would be unrestricted in emergency situations, as 

illustrated in the following utilities and communications agreements:

Emergency . . . work caused by fire, flood, storm, or 

other major difficulty shall not be subject to the provisions 

of this [subcontracting] article.

* * *

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 ....

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
16

(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

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
17

“ cancellation” or “ termination” of the agreement. 

The following is the standard language found 

among clauses covering electricians in the construction industry:

Local Union . . . is a part of the International Brotherhood of Electrical Workers, and any violation or annulment of working rules or agreement of any other local union 

of the IBEW or the subletting, assigning, or the transfer of 

any work in connection with electrical work to any person, 

firm, or corporation not complying with the terms of this 

agreement by the employer, will be sufficient cause for 

cancellation of this agreement, after the facts have been 

determined by the international office of the union.

One agreement in the apparel industry sanctioned 

union exercise of an injunctive remedy, as follows:

The employer agrees that he will at no time buy cut 

goods for caps or hats to be manufactured on his premises 

nor shall he contract any work to any nonunion shop. 

Notwithstanding the provisions of paragraph 23, and in 

addition to the relief provided in said paragraph, a breach 

of this clause shall also entitle the union, in an action at 

law or in equity, to judgment for damages for wages lost 

by its members, employees of the employer, as well as to 

injunctive relief to restrain a further breach of this clause.

A number of provisions, mostly in the construction and utilities industries, permitted noncompliance with subcontracting provisions under certain 

circumstances. Commonly, the union waived 

enforcement if the employer, in fulfilling his obligations under the subcontracting clause, would 

violate State or Federal statutes. In a few additional situations, the clause could be bypassed if 

its compliance created economic hardships for the 

employer. The following provision from an electrical machinery agreement covered both situations:

When building or construction work of the type customarily performed by xthe building trades unions of the 

AFL-CIO is contracted out, preference shall be given to 

qualified contractors employing members of the trade 

unions affiliated with the AFL-CIO. Nothing herein 

shall require the company to violate Federal, State, or 

municipal regulations, to delay the work, to employ a contractor either not readily available or not equipped to do 

the work, or to bear unreasonable cost. If faced with such 

contingencies, the company shall immediately take the 

matter up with a proper representative of the local union.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
19

Appendixes

In order to illustrate the several elements of policy relating to subcontracting, 

selected clauses illustrating a variety of situations are reproduced on the following pages. 

These should not be considered as model or typical provisions.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
20

Appendix I. Subcontracting Construction and Other Services

From the agreement between 

the Columbia-Southern Chemical Corp. , 

and Allied Chemical and Alkali 

W orkers of Am erica (in d.)

ARTICLE V

Repairs and Construction

Section 1.

When a contract is let by the company for any repairs or construction work, the com ­

pany will attempt fairly to employ directly, or, if practical, through any contractor as 

many idle em ployees as possible, provided they are qualified for the work available in 

making repairs to buildings, tanks, and equipment, or in building new structures, and 

at rates in no cases less than the minimum plant rate for the type of work perform ed. 

The company will notify the union as soon as possible of contracts let for construction 

or repair work, giving the name of the contractor, nature of the work, approximate 

number of man hours, and reason therefor. The company will make a sincere effort 

to notify the union prior to contracting the work.

Section 2.

This clause is not intended to restrict the company in its right to let contracts for new 

construction or large repair jobs when it feels it necessary or expedient to do so, such 

as not having the necessary equipment or supervision for such operations. It also applies 

to the employment of skilled artisans from outside its regular plant organization when 

it is necessary to do so.

Section 3.

With respect to skilled trades within the plant, it is understood that if a con tractor^ 

employees work overtim e, then, at least an equivalent number of available plant em ­

ployees of the same skill will be permitted to work overtim e on the same day, except 

when special circum stances exist, such as:

(1) Industry practice as regards to B rick Masons provides that overtime must be worked.

Example: Silicate furnace tank repair— contractor personnel cannot be obtained unless 

they work 10 hours a day.

(2) Where the job must be worked on a continuous basis.

Example: Where welding and annealing pipe lines is involved and must be continued until 

job com pletion.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
21

From the agreement between 

the Dunlop Tire and Rubber C o rp ., 

and the United Rubber, Cork, 

Linoleum and Plastic Workers 

of Am erica (AFL-CIO)

A R T IC L E VIII

General Rules

Section 8.09— Outside Contractors.

While in general it is the policy and intent of the company to have that work perform ed 

by its maintenance em ployees which they are able to handle, it is recognized by both 

parties that at various times the company may be required to allot to outside contractors 

work of sim ilar or identical nature as that perform ed by company maintenance em ployees. 

Such allotment of contracts shall be governed by the following:

(a) That the work project is of such size or nature as to make it im practical to be 

handled by the above mentioned employees in conjunction with their regular work 

assignments or

(b) That the work is of such urgency or short duration as to make it im practical to 

add additional men to the regular maintenance fo rce .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
22

From the agreement between 

The E lectric Storage Battery C o., 

and the International Union, United 

Automobile, A ircraft and Agricultural 

Implement W orkers of A m erica (AFL-CIO)

ARTICLE XI

Subcontracting Work

Statement of com pany’s position relative to letting maintenance contracts to outside contractors. Maintenance shall include janitors, yard men and sw eepers.

The company intends to utilize our own personnel and equipment wherever it is feasible. 

It is anticipated that it will be feasible and advantageous in the great m ajority of instances. However, it must be recognized by everyone that there are some jobs which 

should be let to outside contractors because they may possess specialized equipment 

which we do not have, or which is already being utilized, or where peculiar skills are 

involved, or in cases where the time limits of the job are such that it cannot be com ­

pleted efficiently within the required time or where the facilities of the company do not 

have the capacity for the project.

It is also the intention of the company to inform union representatives of the reasons 

why such contracts are being let to outside contractors. Consideration will be given 

to facts and arguments presented by union representatives and they will be weighed in 

making the final decision. A procedure will be established internal to the company 

organization which should give reasonable assurance that this will be done.

The final decision as to whether the work will be done by our personnel or by outside 

contractors is one which properly is inherent in the company function and this should 

be recognized by all concerned.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
23

Appendix II. Subcontracting Production P rocesses or the M ajor Activity

A. Construction Industry

From the agreement between 

The Associated General Contractors of 

A m erica, Southern California Chapter 

and the United Brotherhood of Carpenters 

and Joiners of A m erica (AFL-CIO)

ARTICLE I

Coverage

B. All work perform ed in the C ontractors' warehouses, shops or yards which have been 

particularly provided or set up to handle work in connection with a job or project 

covered by the term s of this agreement, and all of the production or fabrication of 

materials by the Contractor, or subcontractor, for use on the project shall be subject to the term s and conditions of this agreement.

C. All work perform ed by the Contractors, and all services rendered for the Contractors, as herein defined, shall be rendered in accordance with each and all of the 

terms and provisions hereof.

D. If the Contractors, parties hereto, shall subcontract job-site work covered under 

the jurisdiction of the United Brotherhood of Carpenters and Joiners of A m erica, 

covered by this agreement, including the furnishing or installation of m aterials, 

perform ance of labor, and the operation of equipment, provision shall be made in 

writing for the observance by these subcontractors with the full terms of this agreement. The Contractors agree to be held liable for the compliance by these subcontractors with this agreement.

A subcontractor shall be defined as a person, firm or corporation, party to this 

agreement, who employs available workmen to perform , as em ployees, services 

covered by the term s and provisions of this agreement.

E. The Contractors and their subcontractors shall have freedom of choice in the purchase of m aterials, except that every reasonable effort shall be made by Contractors 

and their subcontractors to refrain from the use of m aterials, which use will tend 

to cause any discord or disturbance on the project. Em ployees shall not be re ­

quired to handle nonunion m aterial.

F. Repairs necessitated by defects of material or workmanship or adjustments of newly 

purchased and/or installed equipment or machinery will not be subject to this agreement when such repairs and/or adjustments are made by the manufacturer thereof 

or his agents or employees pursuant to the terms of a m anufacturer's guarantee and 

the union will not hamper such manufacturer or his agents or em ployees on such 

exempted work.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
24

From the agreement between 

the Mason C ontractors1 Association, In c., 

and the Metropolitan Executive Committee 

of Bricklayers (AFL-CIO)

ARTICLE IX

Subcontracting

Section 1.

A subcontractor is defined as any person, firm or corporation, which agrees orally or 

in writing to perform for or on behalf of an em ployer any part or portion of the work 

covered in this agreement.

Section 2.

The Joint Arbitration Board shall com pile and publish a list of responsible subcontractors. The Board shall revise the list periodically and may add to, or delete from , 

the list in its discretion in accordance with uniform rules and standards established 

by the Board.

Section 3.

In the event an em ployer elects to subcontract any work covered by this agreement to 

a subcontractor who does not appear on the list published by the Joint Arbitration Board 

such em ployer shall:

(a) Provide in the subcontract for compliance by the subcontractor with the terms and 

conditions of this agreement;

(b) Remain responsible at all times for full compliance with the agreement by such 

subcontractor.

ARTICLE XIII

Contracting

Section 3.

No member of the unions of the metropolitan area shall be allowed to subcontract work 

of any character, covered by our classification of work, or work for any person contracting work by the thousands, or lump work of any character taken from general con ­

tractors without furnishing m aterials.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
25

B. Apparel Industry

From the agreement between 

The Clothing Manufacturers Association 

of the United States of A m erica, and the 

Amalgamated Clothing W orkers of A m erica (AFL-CIO)

ARTICLE XIV

Other Factories and Contractors

(a) During the term of this agreement the em ployer agrees that he shall not, without 

the consent of the union, remove or cause to be rem oved his present plant or plants 

from the city or cities in which such plant or plants are located.

(b) During the term of this agreement the em ployer may with the consent of the union 

manufacture garments or cause them to be manufactured in a factory other than 

his present factory or factories provided his factory or factories have and continue 

to have full employment and provided further that such other factory or factories 

are under contract with the union.

(c) The em ployer further agrees that he shall send work only to such union contractors 

designated by agreement of the parties herein. The em ployer employing contractors 

agrees simultaneously with the execution of this agreement to execute a contractor 

registration statement, the terms and conditions of which shall be specifically incorporated herein by reference.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
26

From the agreement between 

The Industrial Council of Cloak, Suit 

and Skirt Manufacturers, In c ., and the 

International Ladies* Garment Workers* 

Union (AFL-CIO)

FIFTH: The Council agrees that all of its members who produce all or part of their 

garments on their own prem ises will maintain union shops, and that all of its 

m em bers who have their garments produced by contractors or submanufacturers 

or who purchase their garments from other m anufacturers, merchants, jobbers 

or w holesalers, will deal only with such firm s as conduct union shops. No 

member of the Council, however, shall purchase any garments whatsoever 

covered by this agreement, unless his inside shop, if he maintains one, and 

the shops of the regularly designated contractors and submanufacturers are 

fully supplied with work, and no such purchase shall be made unless the same 

is bona fide and genuine or if the purpose of such purchase is to avoid any of 

the obligations herein provided for to the workers of the inside shop of the 

member of the Council and of his regularly designated contractors and subm anufacturers.

The union shall have the right to have its representative visit the shops of the 

m em bers of the Council at all tim es, for the purpose of examining the union 

standing of the w orkers, which examination shall not involve the loss of worktim e. All such examinations shall be had on notice to the Council which shall, 

in each instance, designate a representative to accompany the union representative on such examination.

No member of the Council shall, directly or indirectly, manufacture or cause 

any garments to be manufactured or purchase any garments from any person, 

firm or corporation against whom the International or the union has declared 

or sanctioned a strike until such strike in each case has been fully settled.

No worker shall be required to perform any work for any em ployer whether 

a member or nonmember of the Council during the pendency of a strike declared 

or sanctioned against such employer by the International or by the union. P e rform ance of such work shall not be deemed in the regular course of the worker* s 

employment and refusal to perform such work shall not be deemed a breach 

of this agreement.

SIXTH: (a) The parties hereto agree that the union has a bona fide interest in the labor

conditions existing in all shops manufacturing ladies*, m isses*, children*s 

and infants* cloaks, coats, suits, skirts and all special types and kinds of 

such garments, and that a close unity of interest exists among the m em bers 

of the International engaged in the work of manufacturing such garments 

regardless of the respective shops in which they are employed.

(b) The parties hereto acknowledge that under prevailing practices in the coat 

and suit industry, manufacturers, jobbers, merchants or wholesalers cause 

garments to be manufactured or work to be perform ed for them or otherwise deal (usually by the "sale" of cut or uncut m aterials and the "repurchase" of completed garments manufactured from such m aterials) by or 

with other individuals, firm s or corporations commonly referred to as 

"con tractors" and/or "subm anufacturers." In all cases, these manufacturers, jobbers, merchants or wholesalers provide the designs, sp ecifications, materials and other items pursuant to which their garments are 

manufactured" by their contractors and submanufacturers. The parties 

hereto acknowledge that each member of the Council and his contractors 

and submanufacturers who manufacture garments or perform work for him 

or with whom he otherwise deals are closely allied and have a close unity 

of interest with each other in the manufacture of such garments, and that, 

in any labor dispute, to the extent of any work perform ed on such garments, 

a member of the Council and his contractors and submanufacturers are not 

"neutrals" with respect to each other but are jointly engaged in an integrated production effort.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
27

From the agreement between 

The Industrial Council of Cloak, Suit 

and Skirt M anufacturers, In c ., and the 

International Ladies* Garment W orkers’ 

Union (AFL-CIO)— Continued

Nothing contained in this number Paragraph "SIXTH (b)" shall be deemed 

to create or enlarge any existing obligation to the workers employed in 

shop of any contractor or sub manufacturer. Nor shall it be interpreted 

as making any member of the Council responsible for any of the acts of 

his contractors or submanufacturers, except to the extent expressly im ­

posed by other paragraphs of this agreement.

SEVENTH: (a) Every member of the Council who employs or deals with contractors 

or submanufacturers shall confine his production to his inside shop and 

to the contractors or submanufacturers heretofore designated by him 

the workers thereof. He shall distribute his work equitably to and among 

his inside shop and his contractors or submanufacturers, with due re ­

gard to the ability of the contractors, submanufacturers and the workers 

to produce and perform . Any firm which becom es a member of the 

Council after the date of the signing of this agreement, shall designate 

its contractors and submanufacturers, if it employs or deals with them, 

on the following basis: (l) The volume of such firm ’s production for 

the preceding year; (2) the capacity of the designated contractors or 

submanufacturers to produce. If such firm has not theretofore been in 

business, it shall designate the number of contractors, if any, which it 

will actually require.

(b) Should a contractor or sub manufacturer designated by a m em ber of the 

Council abandon his designation or cease to operate his business, through 

collusion, or by arrangement with such m em ber, or should the designation of such contractor or submanufacturer be cancelled or annulled 

by the Impartial Chairman, the workers of such contractor or submanufacturer shall immediately be absorbed either by the inside shop 

of the m em ber, if he maintains one, or by the remaining designated 

contractors or submanufacturers of such m em ber. In any other case 

where a contractor or submanufacturer of such m em ber abandons his 

designation or ceases to operate his business, the Impartial Chairman 

shall make such determination with respect to the workers of the contractor or submanufacturer as the m erits of each particular case warrants, and, if absorption shall be directed, the same shall not be beyond 

the existing facilities of the inside shop of the member of the Council, 

if he maintains one, and of his regularly designated contractors and 

submanufacturers.

(c) No member of the Council shall designate contractors or submanufacturers unless he operates a union shop as herein defined and can fully 

supply his inside shop with work.

(d) No member of the Council shall employ cutters or maintain any cutting 

facilities whatsoever on his prem ises, or send out cut goods to contractors, unless he operates an inside shop.

(e) If the member making such designation shall, at any time, change the 

character of his product and the contractors or submanufacturers designated by him or any of them shall be incapable of meeting his changed 

requirem ents, he shall have the right to substitute and/or add such other 

contractors or submanufacturers in place of those incapable of meeting 

his changed requirem ents. Such substitution and/or addition shall not 

be made until after the decision of the Impartial Chairman on notice 

and hearing within 48 hours.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
28

From the agreement between 

The Industrial Council of Cloak, Suit 

and Skirt Manufacturers, In c ., and the 

International L adies1 Garment Workers* 

Union (AFL-CIO)— Continued

(f) A contractor or submanufacturer shall work exclusively for the m em ber 

of the Council so designating him, unless otherwise approved by the 

Council, the Am erican Cloak and Suit Manufacturers* Association, In c., 

and the Union, or the Impartial Chairman. A contractor or submanufacturer thus designated shall not distribute or sell directly or indirectly 

any merchandise to any other manufacturer, merchant, jobber, wholesaler, retailer or consum er.

(g) A m em ber of the Council whose garments are made by contractors or 

submanufacturers shall pay to such contractors or submanufacturers at 

least an amount sufficient to enable the contractor or submanufacturer 

to pay to the workers the wages and earnings provided for in this agreement, and, in addition, a reasonable payment to the contractor or submanufacturer to cover his overhead.

(h) Where it shall be established that there has been an underpayment made 

by a m em ber of the Council to the contractor or sub manufacturer or the 

w orkers, the amount of such underpayment shall be paid by such member 

of the Council 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 Council and the union, or, upon their failure 

to agree, as may be determined by the Impartial Chairman.

(i) Each m em ber of the Council shall be responsible to the workers in each 

of the crafts covered by this agreement for the payment of their wages 

for work done by them on garments of such Council member made by 

contractors or submanufacturers, provided that such liability shall be 

lim ited to wages for 10 full working days in every instance. However, 

if the member of the Council fails to make payment to the contractor 

or submanufacturer on or before Tuesday following the week in which 

the work was perform ed, the liability of the m ember of the Council h ereunder shall be deemed extended beyond the 10 working days and shall 

continue for 1 day for each additional day for which such workers have 

not- been paid their wages by reason of the nonpayment thereof by the 

m em ber of the Council to his contractors or submanufacturers. Notice 

of default by the contractor or submanufacturer in payment of wages 

due the workers shall be given by the union to such Council member 

within 10 days after the first default.

NINTH: The Council, on its own motion, will investigate any or all of the books and 

records of its members to ascertain whether they are giving work to or dealing 

with nonunion or nondesignated shops. Upon complaint filed by the union, the 

privilege will also be accorded a representative of the union to accompany a 

representative of the Council to examine the books and records of the member 

against whom a complaint has been filed, for the purpose only of determining 

whether such member is giving work to nonunion or nondesignated shops. Such 

examination shall be undertaken within 48 hours from the receipt of the request, 

and shall be conducted under such conditions and limitations as may be prescribed by the Impartial Chairman hereinafter designated.

Upon the request of the union, the Impartial Chairman or his accountants shall 

examine the books of any designated Council member for the purpose of a scertaining whether the provisions of this agreement are fully com plied with. The 

Impartial Chairman, upon his own motion, may make the aforementioned 

investigation.

A uniform set of books and records relating to payrolls, labor cost and outside 

production shall be adopted by all m em bers of the Council and by the entire 

industry. The form of such records and books shall be prescribed by the 

Impartial Chairman. Such records and books shall be open to the examination 

Digitized for FRASER 

of the Impartial Chairman or his accountants at all reasonable tim es.

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
29

From the agreement between 

The Industrial Council of Cloak, Suit 

and Skirt Manufacturers, In c ., and the 

International Ladies' Garment W orkers' 

Union (AFL-CIO)—-Continued

TENTH: F or the purpose of carrying the provisions of the above article into effect, the 

union shall immediately submit to the Council a list of all union shops which are 

operating under contracts with it and shall at least once in every week notify 

the Council of all changes in and additions to the list.

No member of the Council shall employ and/or designate, or continue the employ 

and/or designation of, a contractor or submanufacturer whose name is not included in the latest corrected list of "union shops" furnished by the union, and 

shall not order or purchase garments or otherwise deal or continue dealing 

with a manufacturer, merchant, jobber or wholesaler whose name is not included 

in such list. Any order or purchase of garments or other dealings, as aforesaid, 

shall be subject, however, to the further restrictions contained in Paragraph 

"FIFTH" hereof.

Whenever it shall appear that a member of the Council gives work to or deals 

with a nonunion shop and/or a nondesignated contractor or submanufacturer, 

the Council shall immediately direct him to withdraw his work from such nonunion shop and/or nondesignated contractor or submanufacturer and to discontinue 

dealing with it, whether such work be in process of operation or otherwise.

Should a member of the Council be found giving work to or dealing with a nondesignated contractor or submanufacturer, the Council and the union shall agree 

upon the amount of damages which the member of the Council shall pay for a 

first offense, which sum shall be sufficiently high

(a) to offset any advantage gained by the member through such transaction, 

giving due regard to the amount involved;

(b) to pay the costs of any investigations made in connection therewith.

In the event of the inability of the Council and the union to agree upon the 

amount of damages, the same shall be determined by the Impartial Chairman.

Should a member of the Council be found giving work to or dealing with a nonunion contractor or submanufacturer, or for the second or any subsequent time 

be found giving work to or dealing with a nondesignated contractor or submanufacturer, the Council and the union shall agree upon the amount of damages 

which the member of the Council shall pay, which sum shall be sufficiently high

(a) to offset any advantage gained by the member through such transaction, 

giving due regard to the amount involved, and upon which any amount 

paid under "(c)" hereof shall be credited on account;

(b) to pay the costs of any investigations made in connection therewith;

(c) to remunerate the workers of the inside shop of the member of the Council, if he maintains one, and the workers of his regularly designated 

contractors or submanufacturers who have sustained damages by reason 

of the above violations.

In the event of the inability of the Council and the union to agree upon the 

amount of damages, or whether any damages have been sustained by the workers, the same shall be determined by the Impartial Chairman.

In such cases where a member of the Council is found giving work to or dealing 

with a nonunion contractor or sub manufacturer, he shall pay the full amount 

of wages lost by the workers by reason of such violation.

Claims for damages to remunerate workers which the union may have against 

any member of the Council who gives work to or deals with nondesignated contractors or submanufacturers shall be filed with the Council any time within 

6 months after such dealings, unless the same shall have been concealed, in 

which event no such limitation shall apply.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
30

From the agreement between 

The Industrial Council of Cloak, Suit 

and Skirt Manufacturers, In c ., and the 

International Ladies* Garment W orkers’ 

Union (AFL-CIO)— Continued

In addition to being required to pay the amounts herein specified, a m em ber, 

who shall be twice found to have given work to or dealt with either a nonunion 

or nondesignated contractor or submanufacturer during the term of this agreement, may be expelled by the Council. Such a m em ber shall likewise autom atically lose all rights and privileges under this agreement to the extent of 

giving the union the right to take such action as it may deem necessary, including the right to strike against such m em ber, to enforce observance of this 

Paragraph number "TENTH. "

The Council may adopt such other m easures as in its judgment are necessary 

and expedient to prevent its members from giving work to nonunion or nondesignated contractors or submanufacturers.

Recognizing the difficulty of ascertainment of the amounts properly payable under 

subdivisions "(a)" and "(b)" of this Paragraph numbered "TENTH", the sums 

determined to be payable hereunder shall for all purposes be deemed liquidated 

damage s .

All amounts paid shall be turned over to the Impartial Chairman towards defraying the expenses of his office, except such amounts as are assessed and 

collected to remunerate the workers who have sustained damages which sums 

shall be turned over to the union and such amounts as are assessed and collected 

in favor of the Retirement Fund and for the Health and Welfare Fund, which 

sums shall be turned over to the respective Fund.

The Council in no event shall be deemed the guarantor or surety of a defaulting 

m em ber, and the failure of any individual member or m em bers to pay the 

amounts herein assessed shall not be deemed a breach of this agreement by 

the Council or any of its nondefaulting m em bers.

TWENTY-SEVENTH: No work shall be given to workers to be made at home and all 

homework of any kind is expressly prohibited.

TWENTY-EIGHTH: No contracting or subcontracting within the shop shall be permitted.

THIRTY-SIXTH: The members of the Am erican Cloak and Suit Manufacturers * A ssociation, Inc. , are recognized in this industry to be the efficient and standard shops 

capable of assisting and stabilizing the industry and eliminating the so-called 

sweat shop evil. Accordingly, the parties hereto agree that m em bers of the 

Council will confine the manufacture of merchandise made for them in contracting or submanufacturing shops to m em bers of the Am erican Association exclusively. And the m em bers of the Am erican Association undertake to give preference to members of the Merchants Ladies* Garment Association, In c., 

m em bers of the Industrial Council of Cloak, Suit and Skirt Manufacturers, 

In c., and m em bers of the Infants* and Children’ s Coat A ssociation, Inc.

The above obligation is assumed by the Council upon the understanding that 

the Am erican Association is an organization of contractors and submanufacturers 

as defined in this agreement. It shall not be binding upon the said Council if 

the membership of the Am erican Association shall contain inside manufacturers 

producing garments for the market on their own account substantially in the 

same manner as m em bers of the Council.

THIRTY-EIGHTH: Each member of the Council shall file weekly with the Impartial 

Chairman a correct copy of the orders for garments placed with his contractors, 

and/or submanufacturers, and the labor price settled on such garments. The 

same shall be available to the union and all parties under collective agreement 

with it.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
31

C. Other Industries

From the agreement between 

The Willys M otors, In c., and the 

International Union, United Automobile, 

A ircraft and Agricultural Implement 

W orkers of Am erica (AFL.-CIO)

Outside Work

Par. 112 (a) The company desires to provide steady employment for as many em ployees 

as practicable in their Toledo plant. To accom plish that end, it will 

continue to keep all the work it is now doing in the Toledo plant and before 

a contract is signed to take any of the work out of the plant that is now 

being done in the plant, the company will submit to the Executive Shop 

Committee, in writing, the data covering the reasons for this action.

(b) After the Committee has analyzed this information and everything being 

equal, they will either m eet these prices or report their decision to a 

meeting of the em ployees and after securing the employees* approval, 

the company will have the prerogative to contract for the work to be 

perform ed outside of the plant.

(c) If the basis of moving such work is equipment and not the cost of running 

the operation, the company will make every effort to secure the machinery 

and keep the work in the plant Failing to secure such needed equipment, 

whenever the company becom es in a financial condition to do so, the same 

issue may be again brought up for negotiations, and it will attempt to bring 

in work that is now being done on the outside whenever this is practicable 

at a comparable or lesser cost, it being understood that the cost of additional machinery must be am ortized by the savings effected in the manufacture of a reasonable number of the Units that we can expect to manufacture .

(d) It is also understood that when a patented article that cannot be made in 

the com pany’ s plant is found to effect savings or be m ore desirable in advancing the sale of the product than the article manufactured in the Com ­

pany’ s plant, the patented article will be procured after complying with the 

first two sections of this paragraph.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Appendix III. Subcontracting Both Production P rocesses 

or the M ajor Activity and Construction 

and Other Services

33

From the agreement between 

The Sinclair Refining Co. , 

and the Oil, Chemical and Atomic 

W orkers International Union (AFL-CIO)

ARTICLE XXIV

Contract Work

1. On pipe lines, in production and in gasoline plants, it is agreed that any classified 

work custom arily perform ed by employees of the em ployer, for the performance of 

which equipment and present or laid-off em ployees are available, shall not be contracted out. Whenever new production is being developed, roustabout and well-pulling 

work shall be perform ed by employees of the em ployer.

2. In refineries, it is agreed that any classified work custom arily perform ed by em ­

ployees of the em ployer shall not be contracted out as long as the em ployer has the 

necessary equipment and so long as there are qualified employees available from 

among present or laid-off em ployees. This, however, shall not apply to m ajor 

construction jobs or to the installation or construction of special or patented equipment not ordinarily installed by the em ployer. The em ployer in such cases will 

advise contractors when qualified employees are available for work on these special 

installations.

3. Employees granted leaves of absence to work for a contractor perform ing services 

for the em ployer shall retain their seniority on the same basis as though they had 

continued to work for the em ployer.

Digitized 

* U.S. G O V ER N M E N T P R IN T IN G O FFICE : 1961 0 — 607810

for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Ball. No.

1282

1279

1272

1266

1251

1248

1233

1216

1209

1296

1293

1284

1280

1274

1259

1250

1236

1232

1267

1263

1239

1278

1225

1225-1

1225-2

Recent BLS Industrial Relations Studies

Title

Agreement Provisions

Paid Sick Leave Provisions in Major Union Contracts, 1959.

Rest Periods, Washup, Work Clothing, and Military Leave Provisions in Major 

Union Contracts.

Union Security and Checkoff Provisions in Major Union Contracts, 1958-59.

Collective Bargaining Clauses: Company Pay for Time Spent on Union Business. 

October 1959.

Premium Pay for Night, Weekend, and Overtime Work in Major Union Contracts, 1958.

Paid Holiday Provisions in Major Union Contracts, 1958.

Paid Vacation Provisions in Major Union Contracts, 1957.

Collective Bargaining Clauses: Dismissal Pay. August 1957.

Analysis of Layoff, Recall, and Work-Sharing Procedures in Union Contracts.

March 1957.

Employee-Benefit Plans

Health and Insurance Plans Under Collective Bargaining:

Life Insurance and Accidental Death and Dismemberment Benefits,

Early Summer I960.

Health and Insurance Plans Under Collective Bargaining:

Major Medical Expense Benefits, Fall I960.

Pension Plans Under Collective Bargaining:

Normal Retirement, and Early and Disability Retirement, Fall 1959.

Health and Insurance Plans Under Collective Bargaining:

Surgical and Medical Benefits, Late Summer 1959.

Health and Insurance Plans Under Collective Bargaining:

Hospital Benefits, Early 1959.

Pension Plans Under Collective Bargaining:

Part I. Vesting Provisions and Requirements for Early Retirement 

Part II. Involuntary Retirement Provisions, Late 1958.

Health and Insurance Plans Under Collective Bargaining:

Accident and Sickness Benefits, Fall 1958.

Digest of One Hundred Selected Health and Insurance Plans Under Collective 

Bargaining, Early 1958.

Digest of One Hundred Selected Pension Plans Under Collective Bargaining, 

Winter 1957-58.

Union Activities

Directory of National and International Labor Unions in the United States, 1959*

Union Constitution Provisions: Trusteeship. November 1959*

Union Constitution Provisions: Election and Tenure of National and International 

Union Officers, 1958.

Work Stoppages

Analysis of Work Stoppages, 1959*

General

A Guide to Labor-Management Relations in the United States. April 1958. 

Supplement No. 1. November 1958.

Supplement No. 2. July 1959.

(Punched for standard binders.)

Price 

30 cents 

30 cents

20 cents 

35 cents

30 cents 

25 cents 

30 cents 

25 cents 

30 cents

25 cents

20 cents 

40 cents 

30 cents 

30 cents 

25 cents

25 cents 

$1.25

45 cents

45 cents 

30 cents 

30 cents

40 cents

$2.00

45 cents 

45 cents

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis