No Blood From A Turnip – Trump Bankruptcy Allows Resort to Disavow Old Collective Bargaining Agreement
- Written by Carl Larson
The Third Circuit recently clarified some ambiguity on how expired labor contracts are affected by Chapter 11 bankruptcy. While it was fairly established that the bankruptcy code permitted employers to modify current collective bargaining agreements (“CBA”), lower courts were divided on how expired CBAs were affected. Generally speaking, when a CBA expires, unlike other contracts, an employer has a duty to maintain the “status quo” of working conditions until a new agreement is reached or negotiations reach an impasse.
Previously, CBAs held a more protected status as contracts in bankruptcy proceedings and debtors were required to meet a very high bar before the contracts could be altered. In In re: Trump Entertainment Resorts Inc. et al., The Trump Taj Mahal was reorganizing its debt in Chapter 11 bankruptcy and blamed some of its difficulty on the terms imposed upon it by its CBA including pension contributions and health and welfare benefits. The Third Circuit rejected the idea that CBAs were somehow different than other contracts for the purposes of bankruptcy. The Court reasoned that the purpose and policy of Chapter 11 bankruptcy is to allow the company to survive by restructuring its obligations. This now includes its labor obligations as well. In the absence of this decision, Trump Taj Mahal would have been required to continue meetings its obligations to maintain the status quo until impasse, which can often take significant time and effort to reach.
- Written by Kevin Cleveland
A California Appeals Court recently clarified how to calculate overtime which includes certain flat sum bonuses: Calculate them according to federal rules. In Alvarado v. Dart Container Corp. of California, Dart Container’s written policy stated that an attendance bonus of $15 per day would be paid to any employee who was scheduled to work a weekend shift and completed the full shift regardless of the hours worked beyond the normal scheduled length of a shift. (Please note that this is not a piece rate case.)
The Employer calculated the amount of overtime paid during a particular pay period by spreading out the attendance bonus over all hours worked during the pay period. By spreading out the bonus over all hours, the “regular rate” of pay used to calculate the rate at which “overtime premium” is paid was lowered compared to if the bonus was applied to a single day where large amounts of overtime were worked. The “overtime premium” was then added to the straight hourly pay for all overtime hours worked and the employee was paid for the overtime they worked in that pay period.