What is a Coop Recognition Agreement?
A Coop Recognition Agreement is a written contract that enables a union to become recognized as the bargaining agent for employees at a specific company or establishment. It’s essentially a shortcut that allows the union to bypass the long process of having to go through an election process before the National Labor Relations Board or a state NLRB.
In most cases, the existence of a current union collective bargaining agreement is what triggers the establishment of the coop recognition agreement. The agreement allows the new workplace’s employees to "piggyback" on the previously established and negotiated contract without the time and resource expenditure necessary to conduct a legal election process. If the union already represents employees at two other companies in an industry that is subject to a master collective bargaining agreement, each of those companies will also have coop recognition agreements established.
The purpose of the coop recognition agreement is to help those employees avoid having to recreate the wheel by negotiating terms and conditions of employment that have already been established by the previous employer(s) and union involved . Basically, it saves time and money.
Typically, coop recognition agreements are used when an employer has been acquired by a new parent company. The recognized union is then entitled to representation and bargaining rights as it relates to the employees of the acquiring employer in the same way as it applies to the employees of the acquired employer. There are some limitations, however. On occasion, a coop recognition agreement will also include a "successor employer" clause that extends the union recognition entitlement to any additional employers that the union may have, but it is time-limited and not always used.
Coop recognition agreements also extend the established contract to operations that are commonly owned and controlled by the acquiring employer.
Many unions have worked hard to use coop recognition agreements to negotiate long-term contracts for their membership’s benefit and job security. They’ve often positioned the agreements as a way to protect their members from extremist non-union employers whom they consider untrustworthy.
Legal Basis and Significance
Recognitions agreements are often found in the statutes and bylaws of cooperative entities, though such agreements may or may not be allowed as a matter of law, and may or may not have to be approved and/or filed with the secretary of state or other regulatory authority, depending on the particular entity, type of recognition agreement, and governing law.
Recognition agreements can be authorized by the statute of the relevant cooperative entity. For example, RCW 24.06.360 authorizes RCW cooperative corporations to enter into recognition agreements with residents of the household, or their representatives, which must provide that (1) the rights of the residents and their representatives as well as the responsibilities of the cooperative corporation will not be unreasonably limited, and (2) the information necessary to exercise the rights of the residents or their representatives will be provided by the association. The same statute further provides that the recognition agreement is enforceable by the members of the household, their representatives, and the cooperative corporation.
Cooperative associations may also have recognition agreement provisions with slightly different requirements. RCW 24.06.370 provides the requirements of both the order and contents of a recognition agreement and the persons required to be furnished a copy.
Regardless of the exact requirements, both of these provisions promote consistency, transparency, and the cooperative principle of providing all members a voice in important decisions.
How to Create a Coop Recognition Agreement
In many instances, a Coop Recognition Agreement is established between the union and the coop governing (administrative) council. Thus, the coop must come out with a resolution in the form of an administrative decision authorizing the council and establishing a procedure to be followed in connection therewith.
The Coop Recognition Agreement can be presented as an administrative decision for signature by the council or by way of a proposal (unsigned) from the union, which is approved as an administrative decision of the council. In the latter case, the council must follow the normal procedure for adoption of an administrative decision. This involves following the rules for vetting a proposal presented to the council; the decision must then be officially approved by the council, and finally, signed by the president of the council. This adoption process must be followed even if the council members are in full agreement with the proposal.
In other words, the adoption process must be followed even if there are no opposing votes. The Coop Recognition Agreement must be made available to members of the coop. If the agreement has been signed by the coop, then a copy should be reproduced and distributed to each member of the coop.
As with any legal corporate decision, the Coop Recognition Agreement must be dated when signed, and be published.
Advantages of Coop Recognition Agreements
Coop recognition agreements ("CRAs") provide a number of benefits that can be quite important to cooperatives. First and foremost, a CRA expressly disclaims the existence of any principal-agent relationship among the parties. This can offer critical protection to cooperatives when working together on projects that might otherwise involve the creation of a principal-agent relationship under applicable agency law.
A CRA also provides for the sharing of information between the parties. Under the terms of the agreement, a party will generally agree to provide the other party with information related to the purpose of the CRA, subject to the confidentiality provisions discussed above.
When it comes to complying with the letter of credit requirements in the Renewable Energy Purchase Agreement ("REPA") between Bonneville Power Administration ("BPA") and energy producers in the Pacific Northwest, a CRA can also streamline this process.
Having multiple BPA REPA counterparties that are the same entity can minimize the number of unique legal obligations that must be addressed. For example, BPA requires its counterparties with REPA obligations to provide letters of credit from an approved list of financial institutions, including letter of credit-related requirements such as potential draw events, amounts, expiration dates, and notice requirements. A CRA may allow the parties to agree to a single letter of credit that meets these requirements, which can eliminate the need for each party to enter into unique arrangements with multiple financial institutions.
The parties can also agree in the CRA to the process by which one party can bring another party into a lawsuit that relates to a purpose for which the CRA exists , which may provide for expedited resolution of disputes before BPA. The CRA can also offer guidance on how the parties will allocate responsibility for obtaining necessary permits, licenses, or approvals, or how costs incurred for the permitting process will be allocated, which may have a significant impact on the willingness of parties to cooperate. The CRA can help to create a process for developing efficiency in the project development process when multiple parties are involved in developing a similar project.
CRAs may also streamline obtaining approvals from the relevant credit rating agencies regarding the registration of hedge instruments and structured transactions. In many instances, each counterparty will need to obtain approval from the credit rating agencies before it enters into a specific transaction. A CRA between the parties can result in a single request being submitted to the rating agencies that covers all hedge instruments and structured transactions in which all of the parties are involved, thereby minimizing the number of submissions made. CRAs are also often more efficient from an administrative perspective than a series of intercreditor agreements.
A CRA is typically based on a template of agreements that is relatively standard among cooperatives. Once the appropriate template has been negotiated, it is relatively easy to take that template and make incremental changes to address the specific requirements of a particular project. In contrast, the process of negotiating intercreditor agreements typically requires the parties to negotiate individual provisions in detail based on information that may not yet be available.
In short, a CRA can be a valuable tool for those looking to jointly and independently advance and pursue unique projects.
Common Issues and How to Address Them
Coop recognition agreements often present challenges even after they have been successfully negotiated. In fact, because collective bargaining relationships require frequent maintenance, failure to address common situations can undermine the relationship and lead to costly business disruptions.
One common challenge arises from the issue of contract coverage. For example, a union in the food processing industry negotiates an agreement covering workers at seven facilities but is recently awarded an organizing certificate for a new facility and a successor union representing the new facility sets up shop for bargaining. Alternatively, a union is awarded an organizing certificate for a facility under the auspices of a neutrality commitment but the union does not understand how neutrality fits into the employer’s contract recognition agreement.
A second common issue is unsettled disputes over eligibility. This problem occurs when workers on either side of the bargaining table identify groups of employees who are arguably covered by the recognition agreement or are simply not eligible for inclusion in the bargaining unit. Employers should expect to face continual challenges to unit composition and, when these drive a wedge between the parties, the best strategy is to put these disputes to the side and conclude very quickly that the collective bargaining relationship has stalled.
A third common issue is the treatment of grievances under a recognition agreement. Unions and employers understand that recognition agreements do not stipulate grievance resolution procedures. Nonetheless, each party should allocate responsibility for handling grievances under a recognition agreement and, whenever necessary, negotiate alternatives to existing grievance resolutions procedures on a site-by-site basis.
The goal of a recognition agreement is to streamline the bargaining process (e.g., worn them down to manageable issues) but parties on both sides of the table must recognize that this does not always happen. A failure to appreciate this contingency can result in disagreements that undermine even the most well-negotiated plan.
Examples of Successful Coop Recognition Agreements
To get a better understanding of the affirmative obligations arising from recognition agreements and the positive impacts such agreements have had on the cooperative entities involved, we have analyzed three different successful recognition agreements and their impact on the cooperatives involved.
The First Recognition Agreement
In the first recognition agreement, the union was able to replace a previous "house" union with a new national union, organizing employees who had been forced to previously pay a majority wage rate (less than other employees) by the predecessor "house" union. The joint committee was consulted for grievances and the approval of supervisors hired by the employer. The employer agreed to meet quarterly to discuss all policies, pay rates, and other standards. Employees were empowered to discuss these issues directly with a committee comprised of union members and organized by subject area. This union committee could attend or call such meetings with the employer for any issue. Both parties had the right to submit issues to arbitration and those issues were submitted to three arbitrators (one selected by each party and a neutral) who render a decision to all parties. Affirmative action policies were implemented with targets according to federal contracts and evidence of success in meeting those targets were reported monthly.
The Second Recognition Agreement
The second recognition agreement basically established a company-wide committee, whose only role was to recommend what type of bargaining time would be used for all collective bargaining agreements . The union had the ability to recommend dates and to use majority bargaining (the union and the employer would agree to contract terms by a majority of the parties) or require that multiple individual plant or local unit bargaining occur. Success in achieving a majority vote was impacted by the recognized economic interdependence of the various plants, their community interest, and the history the union had in organizing those plants. This agreement required monthly reporting on hiring, qualifications, affirmative action initiatives (including race and gender demographics by location of hiring and retention), grievance filings and resolution, review of applications for employment, annual reporting of training opportunities and training opportunities offered. The agreement also provided for the establishment of health and safety committees to research and conduct reports on safety issues and to recommend policy recommendations to the employer for implementation.
The Third Recognition Agreement
In the third case, minority bargaining was the only option for collective bargaining at the request of the union. A straw poll of all locations was taken to determine interest in collective bargaining and if a unit of the entire organization chose to engage in collective bargaining that unit was allocated a proportionate share of the majority vote. The parties then negotiated and agreed to a single national contract based on the interests of the employees and their common performance in the industry and their historical interaction with the union. The agreement provided monthly reports on affirmative action, hiring, seniority, and change of seniority. The agreement also required the establishment of professional development programs (for example, construction safety) for hire, retention, and advancement.