On July 23, 2012, the Seventh Circuit, in McCleskey v. DLF Construction, Inc., agreed with the United States District Court for the Southern District of Indiana that a construction company, DLF Construction, Inc., (“DLF”) was required to contribute to two funds for all work performed by members of the Local 692 of the Cement Masons Union (“Union”), including non-bargaining unit work.
DLF entered into a Memorandum of Joint Working Agreement with the Union (“MOA”), agreeing to be bound by all Collective Bargaining Agreements (“CBAs”) between the Union and various employer associations within the geographical jurisdiction of the Union. Under the CBAs’ terms, DLF was required to make fringe benefit contributions to two funds on behalf of the members of the Union. A journeyman cement mason and member of the Union worked for DLF between 2006 and 2008, performing both bargaining unit work and non-bargaining unit work. DLF only made contributions to the funds for the bargaining unit work performed by the Union member. The trustee of the funds brought suit against DLF seeking contributions for the non-bargaining unit work the Union member performed.
DLF argued that pursuant to the MOA, it was not contractually bound to make contributions for non-bargaining unit work. To support that argument, DLF pointed to Section 2 of the MOA that stated:
[DLF] agrees to be bound to all Collective Bargaining Agreements between the Union and the various Employer Associations in the geographical jurisdiction of the Union, and hereby incorporated herein with the same force and effect as if herein set forth in full, with respect to wages, hours of work, fringe benefits, and all other terms and conditions of employment for all aforesaid Cement Mason, Plasterer and Shop Hand employees
The Seventh Circuit disagreed with DLF’s argument explaining that all the above paragraph did was establish that for an employee to be covered under the CBA, he or she must be an employee who does bargaining unit work; “it does not limit the CBA’s coverage to employees doing only bargaining unit work.” The Court determined that Section 2 was not intended to, and did not, define bargaining unit work for the purposes of fringe benefit contributions. The Court explained that the MOA bound DLF to the terms of the CBAs, which in turn obligated DLF to make fringe benefit contributions to the funds on behalf of Union members. The Seventh Circuit held that the CBAs specifically required DLF to pay into the funds for “each hour worked by employees covered by [the CBAs],” including non-bargaining unit work.
In light of this decision, employers must be mindful of the implication and affect of other agreements, when entering into contracts that may bind them to the terms of other agreements.
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