Generally, a lawsuit is the worst way to resolve a labor dispute. But sometimes, it could be the only & best way.

Case in point, recently I helped a client resolve a difficult union dispute by convincing them that getting sued by their labor union would work to their advantage. For many reasons, I won’t disclose any identifying information about my client & the union.

Arguably, my client owed the union about $50k in unpaid pension contributions & health insurance payments. Since signing off on the collective bargaining agreement, my client had not contributed to either. As a small business, my client & their employees had no interest in either, & they never took advantage of the insurance & never anticipate taking advantage of the pension. Nevertheless, my client needs the union because some of the contracts they work on require union membership & the union’s blessing. Moreover, the union wanted their money.

Also, it should be noted that this particular union has a good reputation among employers. They’re known for being cooperative & empathetic, but not being pushovers or sellouts. I often criticize labor unions, but they’re not all bad. And, even though I’ve  predicted that they’ll be out of the U.S.’ private sector by 2050, they’re still around & we still have to work with them.

When we discussed ways of dealing with the union’s demand for the $50k in back payments, my client determined that they could afford the contributions to the pension fund (about $25k) but not the health benefits.  Consequently, I posed the following to my client:

  • We either had to convince the union to accept an offer to pay only the approximately $25k in pension payments, or we’d have to be sued & either litigate or work out a settlement in court.

For the obvious reasons (costs & needing the union’s “blessing” for future work contracts), my client was hesitant to accept a lawsuit. However, I know that many unions count on their opposition to just give in to either the threat of litigation or some other form of intimidation. By telling the union that we would accept a lawsuit & persevere through the litigation process, in the remote chance that this could save my client more money than the union demanded, the union might negotiate a more reasonable settlement with us.

When I said this to the union, I related that my client didn’t want to be sued, but that I didn’t see a more cost effective alternative. Perhaps even more importantly, I also told the union that in order to expedite the process & save everyone money, we would waive “service of process” & any other court formalities.  This must have resonated with the union, because a couple of weeks after telling them this, they agreed to settle for only the pension payments & waived the benefits payments. They agreed that it was best for everyone concerned to avoid litigation & settle the matter.

Not only did they equitably resolve this dispute, but they also referred new business to my client.  Like I said, not all unions are bad.  Some of them, this one in particular, understand how business works in 2013. Even though they need to protect their pension fund, they also know that they need to help their members & partner with the business owners who sign the collective bargaining agreements. It’s just in everyone’s best interests.