Construction Industry Double-Breasting: Recent Trends and Best Practices

August 17, 2016

The days of unions having a firm, if not solitary, hold on construction in New York City have begun to wane. In light of the recent death of 421-a and the Mayor's push for affordable housing, while public projects are still largely union jobs, the private sector, especially residential, is turning to more cost-effective means to build.

Something had to give, and it appears to be union labor. The newly formed New York Construction Alliance, a collaboration of open shop construction firms, is proof positive.

Many major construction managers are refusing to renew collective bargaining agreements and creating non-union companies to handle non-union jobs — known in labor law as "double-breasting." However, ending the relationship with a union exposes employers to "withdrawal liability" from underfunded union pension funds. The dollars involved here can be game-changing.

With careful planning, companies can take appropriate steps to avoid liability to the unions and their companion employee benefit funds, to create a successful and lawful "double-breasting" operation.

Best Practices to Avoid Union Withdrawal Liability:

  • Understand how the liability is defined, what triggers it and how to calculate. Knowing these key elements in advance of a withdrawal attempt is critical.
  • When the company withdraws, establishing separate companies, management and operations will be critical in avoiding union liability.
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Name Title Direct Dial Vcard
Drogin, Laurent S. Partner and Head of Labor & Employment Practice Partner and Head of Labor & Employment Practice 212.216.8016 VCard
Stanziale, Laurie A. Partner Partner 212.216.1175 VCard

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