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March 30, 2021 | HR Compliance | Posted by Ascentis Thought Leadership

How to Maintain Compliance with Union Contracts

Union relationships represent a unique challenge for employers. A large part of the reason that workers’ unions exist in the first place is because employers and employees often have very different views on workforce issues. Even so, that doesn’t mean that employers and unions must or should be antagonistic toward each other. Both organizations ultimately share a common goal of creating a safer, more productive work environment that will benefit both the employer and employees. From that perspective, it makes sense for every employer to get fully educated on what union contracts really require of them. Here are a few common union requirements employers should be aware of.

Step-pay rates

Pay grade step progression, also known as wage progression or step pay, is a method of payment that helps ensure that all employees working the same job at the same level are receiving the same rate of pay, and that any pay increases likewise maintain that equity. This payment method is favored by many unions as a way to prevent preferential treatment or discrimination where payroll is concerned.

For example, under a step-pay plan, if a unionized manufacturing employee completes a training program to get certified to operate a certain piece of equipment, their pay rate for that work should then be adjusted to match all employees with the same certification. Any subsequent raises should apply to all workers trained on that piece of equipment. Step pay plays an especially big role for employers who maintain multiple job rates — different rates of pay depending on specific jobs performed.


When negotiating a union contract, transparency is crucial on all sides. Using workforce management software with employee time tracking functions to trace and audit jobs done by a workforce helps to eliminate potential points of confusion, encouraging more straightforward and productive communication between employers and unions. Some especially important data in these negotiations includes:

  • The specific nature of the work being performed
  • When the work was performed
  • Employees’ level of training and/or certification to perform the work in question
  • Pay rates for the work being performed

By using your HRIS system to provide as much transparency as possible into all of this data, employers can establish greater trust while also holding employees responsible for performing their roles as expected. An honest dialogue about these tasks and expectations can boost employee acceptance and decrease the likelihood of grievances, creating a more fruitful environment for negotiation.

Overtime equalization

For jobs where overtime pay is required by the Fair Labor Standards Act (FLSA), union rules often require employers to equalize the distribution of overtime amongst employees with the same job classification. Again, this is a measure that helps prevent an employer or manager from using overtime as either a reward — granting more overtime hours to a favored employee, perhaps — or a punishment — refusing to let certain workers collect overtime pay, or requiring certain workers to work extra hours against their wishes.

Overtime equalization policies should be clearly defined in the union bargaining agreement. Policies often involve an offering process based on combinations of some of the following: seniority, job class, and hours previously offered, accepted, and rejected by the employee. Employees are generally required to respond to an offer by either accepting or rejecting overtime offers. Employers then refer to the log to ensure that hours are being distributed equally and in compliance with the agreement. Having HCM software with an electronic process of equalizing, offering, and processing those employee responses can greatly reduce the overhead involved in managing the policy. In addition, it creates a digital source for audit reporting purposes.

Scheduled pay rate increases

The popular conception of pay raises tends to focus on merit-based pay — the concept of “Do a better job, get better pay.” While that may seem like a reasonable standard on its surface, the fact is that basing pay increases solely on perceived performance leaves the door open for favoritism and can breed resentment amongst workers when someone gets passed over for what they feel is a deserved increase.

That’s why many unions have negotiated a scheduled system of pay rate increases. That essentially means that all workers in the same classification receive the same pay increase on a set timetable. For example, an equipment operator working under a scheduled increase system might be contractually guaranteed a 3% pay raise after completing a full year in the role. That same increase would be likewise guaranteed to every other employee performing the same role for a full year. Not only does this system help to maintain fair pay, it may also improve employee retention by tying a longer tenure directly to financial reward.

Unique contracts

One of the reasons unions remain necessary in the modern work landscape is that many issues facing employers and employees do not have one-size-fits-all solutions. Different industries require different health and safety standards, offer different employee benefits, follow different pay structures, abide by different terms of negotiation, and much more. Healthcare workers’ unions, for example, have a responsibility to continue providing quality patient care even in the event of a strike. For that reason, nurses’ unions always have a patient protection plan in place well in advance of a potential strike, giving their employers time and guidance to make sure that the health and well-being of patients is not endangered.

It is crucial for employers to recognize the unique facets of their industry as they play into their union contracts. Requirements surrounding overtime pay, employee benefits, leave requirements, safety standards, hiring and dismissal standards, and working conditions can vary widely depending on your industry, size, location, and other factors. As the modern workforce shifts away from a traditional full-time employee environment and toward a hybrid model that includes more contingent workers, contractors, and freelancers, both employers and union representatives need to account for the ways that division between union and non-union employees will impact the workplace.

Understanding the specific nature of these issues as they apply to your business is essential to maintaining a strong, mutually beneficial relationship with employee unions. It pays for employers to get their goals aligned with employee unions as early in the bargaining process as possible. Employers should draw up detailed accounts of the business’s goals, expectations, and any internal or external challenges they anticipate. By collaborating openly and honestly with union representatives, an employer can put itself in a much better position for future negotiations. While there will likely still be conflicts and disagreements along the way, developing a clear and early understanding of each party’s wants and needs will help avoid intractable pitfalls further down the line.

Contrary to popular conceptions of management and unions being constantly pitted against each other, most employers maintain a strong and productive relationship with their workers’ unions. By educating yourself fully on the goals, methods, and expectations of the unions they deal with on a regular basis, employers can help build a more harmonious and ultimately productive work environment. Find out how upgrading your HR system with workforce management software and online payroll software, and compliance solutions from Ascentis can help keep your organization working smoothly with your unions.

With more than 35 years of experience in providing Software as a Service (SaaS) solutions, Ascentis thought leaders have become a respected source for insights, tips, and innovations in the Human Capital Management (HCM) space.