Good Faith Bargaining: Everything You Need to Know
Good faith bargaining typically refers to a party's duty to meet and negotiate at reasonable times with another party. 3 min read
Good faith bargaining typically refers to a party's duty to meet and negotiate at reasonable times with another party. Parties should be willing to reach an agreement, although neither party is required to agree to any proposal or make concessions.
About Good Faith
Good faith refers to the requirement for an individual to behave in an honest manner and to uphold promises while not holding someone to an impossible standard or taking unfair advantage.
A number of situations rely on the concept of good faith, including:
- Business dealings
- Contract negotiations
- Settlement negotiations
Business law also requires parties to act in good faith. The directors and officers of a business are required to deal in good faith to anyone — including its own shareholders — when they act on the company's behalf. Most courts consider one of two standards to determine whether a defendant acted in good faith.
The first standard considers reasonableness. A defendant may be held liable for dealing in bad faith if it refuses to fulfill its end of a bargain or uphold its end in a contract for no reason or a reason unrelated to the actual situation.
The second standard considers reasonableness, but it also considers intent. Using this standard, a defendant may be held liable for bad faith dealing if it didn't behave reasonably and had good reason to know it had no reasonable basis for its actions.
Duty to Bargain in Good Faith
As an example of good versus bad faith bargaining, consider union negotiations, where each side has a duty to bargain in good faith. This is considered an obligation on both sides for the purpose of reaching an agreement. In negotiations, good faith bargaining means to meet at reasonable times and to confer in good faith with respect to hours, wages, and other conditions of employment. Remember, neither side has to agree to any proposals.
Total conduct is considered when judging the quality of negotiations, so an employer shouldn't be judged only based on its behavior during negotiations but by its words and actions overall. Companies should obtain as much bargaining knowledge as possible to negotiate the most satisfactory contract.
It's expected to have a give-and-take atmosphere in good faith bargaining. If a company isn't used to that, it should consult a labor relations attorney to avoid breaching its good faith bargaining duty.
While good faith bargaining sounds straightforward, sometimes labor unions use it during negotiations to get what they want from an employer. Some unions have filed charges for unfair labor practices before negotiations even start when parties can't agree on things like location, time, and dates.
For example, a union may want to meet at the employer's place of business but the employer doesn't. The employer may decline the union's offer to meet in the union hall. In other cases, unions may refuse to split the cost if employers want to pay to meet in a neutral spot, such as an airport, community center, or hotel conference room.
When a stalemate occurs, unions may file charges that the employer isn't acting in good faith. Employers may then have to defend these charges or meet at an undesirable location.
There's also the problem of when to meet. Employers prefer to meet when negotiations cause little disruption to the workday. Unions, on the other hand, prefer to meet during the day so that workers' personal time isn't affected.
There are also documents that fall into a gray area concerning what must be turned over and what doesn't have to be. When one side doesn't turn over these requested documents, the other may levy charges of bad faith bargaining.
Another major concept in good versus bad faith bargaining is negotiation pay. Unless a prior collective bargaining agreement specifies it or the parties agree, employers don't have to pay workers for this time. Unions state that not paying employees during negotiations isn't bargaining in good faith since employers are forcing workers to either attend negotiations and not get paid or to work and get paid.
Being honest in business dealings should be standard practice. Knowing they may be upheld to certain good faith standards may be added incentive for individuals and companies.
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