Document Type

Article

Publication Title

University of Pennsylvania Journal of Labor and Employment Law

Abstract

In both the union and nonunion sectors, firms restructure their assets and production, deciding continuously whether to make or buy an input (the subcontracting decision), as well as whether to continue or to exit a product line. The principal difference in the legal requirements applicable to restructuring in the union sector lies in the National Labor Relations Act's (NLRA) obligation to bargain over the "terms and conditions of employment." This obligation raises the legal question of when, in an asset restructuring, there is a duty to bargain with the union. The question has significance for asset restructuring in both the union and nonunion sectors because the regime of explicit contracting encouraged by the NLRA provides our clearest window into the less easily identified patterns of implicit contracting that prevail in the substantially larger nonunion sector. In this Article, we use labor economics to elucidate the nature of the question, the competing concerns, and, finally, to provide a positive theory of the law. In Part I, we describe the problems raised by the restructuring of production through subcontracting and asset sales, and describe, in highly stylized form, the principal types of cases that arise. In Part II, we summarize the current state of the law as it applies to these common types of cases. Finally, in Part III, we analyze the economic logic of the legal doctrines by summarizing the relevant economic analyses and applying them to the principal types of cases that arise.

First Page

201

Volume

1

Publication Date

1998

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