Divided Court Says Ohio Employer Bound by Union Agreement it Never Signed

In one of its final opinions of 2015, a Sixth Circuit panel of judges concluded in a 2-1 decision that an employer could be bound by a collective bargaining agreement (“CBA”) even if the employer never signed the CBA or expressly authorized another agent to sign on its behalf. In Bd. of Trs. Local 392, et al. v. B&B Mech. Servs., five multi-employer fringe benefit funds (“the Funds”) of a local union sued B&B Mechanical Services, an Ohio commercial plumbing contractor. The Funds sought to collect delinquent employee fringe benefit contributions totaling over $130,000 plus liquidated damages and audit and attorney’s fees.

B&B argued that it was not obligated to make contributions to the Funds because it never signed the CBA and was therefore not bound by its requirements. B&B further alleged that the 10 years’ worth of contributions it did make were voluntary. The Sixth Circuit determined that, at all relevant times, B&B was a member of the Mechanical Contractors Association (MCA), which serves as the multi-employer bargaining representative in contract negotiations with the union. Prior case law has held that members of an employers’ association do not need to sign letters of assent in order to be bound by a CBA entered into between the employer’s association and the union. In this case, the CBA was executed by MCA and the union and stated “this agreement shall be binding upon the Union and the employers.” According to the terms of the CBA, B&B qualified as an “employer.”

The Sixth Circuit did not reach whether B&B’s course of conduct alone was sufficient to demonstrate an obligation to make the contributions. It seems that courts are willing to assume membership in an employers’ association, unless an employer can provide express evidence to the contrary. This case also underscores the importance of reading the fine print, as a signed document referring to a CBA will likely bind an employer to that CBA. Employers should consult an attorney before signing agreements, contributing to fringe funds, or participating in fund-sponsored audits.