How do you best resolve a labor grievance? If you're an individual employee, you can take it up with your boss and, progressing beyond that, quit. If you and your coworkers have assigned your negotiating rights to a labor union, however, things can get a bit more heated.
Strikes have been around since the dawn of organized labor. In fact, they're a large part of why labor got organized in the first place. As society has gotten more affluent through the centuries, and workers' grievances have advanced from minimizing the coal dust in their lungs all the way to getting their elective cosmetic surgeries paid for, labor disputes continue to garner attention. The latest work stoppage to find its way into the popular consciousness involves an industry that, to be diplomatic, is not exactly of crucial national interest. It isn't aerospace nor automotive but rather junk food.

Hostess Brands, maker of Twinkies and Ding Dongs, recently announced it would liquidate rather than wage a labor war. Hostess filed for bankruptcy in 2004, restructured and came out of the proceedings as a private company. Within seven years the company again had problems making its obligations, such as union pension benefits that Hostess spelled out and agreed to contractually.

Things Change
Circumstances change, and sometimes it becomes impossible for a party to a contract to uphold its end of the bargain. However, there's the more practical and longer-term solution: both parties can agree to tear up the previous understanding and try to renegotiate from a new position. In this case, it means that the Bakery, Confectionery, Tobacco Workers and Grain Millers International might get less than it wanted but better that than all of nothing.

In January, Hostess filed for bankruptcy yet again. The company cited pension obligations as just one contributing factor. Another factor was the medical benefits it had agreed to pay. The union refused to break the contract, and Hostess management called its workers' bluff. On Nov. 16 the company announced it'd be shutting down permanently.

Few people question the incompetence of Hostess' management. After all, the company faced an overwhelming financial crisis a mere seven years after going to the extreme measure of declaring bankruptcy. While the union shouldn't be expected to continue to concede on points it already agreed to, at some point management's failure becomes everyone's failure.

NHL Woes
The NHL isn't an enterprise in the sense that Hostess is, or was, but rather a collection of 30 businesses that operate as one when negotiating labor agreements with their players. In 2004-05, the league attempted to get its players' union to agree to tie gross payroll to league revenues. The union balked, the league locked the players out and the impasse continued for 10 months, which was long enough to wipe out an entire season.

With the pie not getting any larger, the National Hockey League Players Association eventually agreed to a modified series of demands. Even with a new contract signed, the immediate fear on both sides was that the league would never recover its customer base. Of course it did, and within a year fans had largely forgotten that the previous season had never existed.

Unfortunately, there's a history of labor strikes in pro sports, and once again the NHL finds itself in a similar situation. Today, the story is much the same as is was in the mid-aughts. The league argued that it deserves concessions simply because of the generally poor economy. A bolstered union maintains that it's being asked to concede what it did previously and then some.

Professional sports inspires extreme devotion. Millions of fans who see their regularly scheduled TV games preempted by sitcom reruns want a resolution. Ultimately, the customers are the last stakeholders to be listened to in these and almost all other disputes.

The Bottom Line
Unions rarely enter strikes lightly. While labor-management disagreements will continue as long as there exist humans on either side, it's usually only as a last resort that workers will go to the trouble of not working. When a union's demands are unreasonable, as they sometimes are, management can often wait the other party out until the parties reach a mutually beneficial solution.

Related Articles
  1. Personal Finance

    Don't Sign That Non-Compete Without Reading This

    Non-compete contracts aren't just for high-level execs these days. How to protect yourself if your employer – or prospective employer – insists you sign one.
  2. Credit & Loans

    Just Hired? How to Navigate Your New Job Benefits

    Being new at a workplace is nerve-wracking enough. Here's what to do first after you've been hired to better navigate complicated benefits plans.
  3. Mutual Funds & ETFs

    Make Employees Happier with This Simple Tip

    Offering socially responsible options is a good way to increase employees' sense of satisfaction, which can lead to improved morale among other things.
  4. Professionals

    Split Dollar Life Insurance: How it Works

    Understanding how split dollar life insurance plans are designed and what tax regulations they must follow.
  5. Retirement

    How To Do a Background Check on Prospective Employees

    Discover why background checks can be extremely costly, tips for small businesses conducting checks on a budget and if professional checks can be avoided.
  6. Retirement

    Why Most People Need to Work Past the Age of 65

    While 65 has always been the prime age for retirement, several changes are making it nearly impossible to leave the workforce at this age.
  7. Entrepreneurship

    How to Write an Effective Job Description to Attract the Right People

    Learn tips and advice for employers on how to write a job posting and what to include in the posting to attract the best candidate for the job.
  8. Investing

    How to Make a Layoff Less Painful

    Getting laid off is never fun, but there are ways you can prepare yourself emotionally and financially to best manage a layoff.
  9. Entrepreneurship

    3 Reasons to Develop an Employee Handbook for Your Small Business

    Learn how a small business can benefit from an employee handbook covering labor laws, codes of conduct, leave policies and media relations.
  10. Entrepreneurship

    Should You Hire Contractors or Employees for Your Small Business?

    Learn the pros and cons of hiring independent contractors instead of regular full-time employees. Find out about a potential risk for severe tax penalties.
RELATED FAQS
  1. Can LLCs have employees?

    A limited liability corporation (LLC) can have an unlimited number of employees. An employee is defined as any individual ... Read Full Answer >>
  2. Do flexible spending accounts (FSA) funds roll over?

    An individual can utilize an employer’s cafeteria plan of employee benefits to establish a flexible spending account (FSA). ... Read Full Answer >>
  3. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  4. What should a whistleblower do if their employer retaliates?

    Although specifically prohibited by employment law, employer retaliation against whistleblowers for exposing employers' wrongdoings ... Read Full Answer >>
  5. Will a hike in the minimum wage result in deadweight loss to businesses and labor?

    There have been studies which show that hikes in minimum wage create deadweight loss to business and labor. It is possible ... Read Full Answer >>
  6. Do businesses in states with right-to-work laws have demonstrably less deadweight ...

    Deadweight loss from union activity is believed to represent as much as 0.04% of the gross domestic product (GDP) as of 2 ... Read Full Answer >>
Hot Definitions
  1. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  2. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  3. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  4. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
  5. Godfather Offer

    An irrefutable takeover offer made to a target company by an acquiring company. Typically, the acquisition price's premium ...
Trading Center