How Collective Bargaining Works

The 1926 Railway Labor Act (RLA) governs collective bargaining between railroads and the major labor organizations that represent railroad employees. The Act was expressly designed to avoid disruptions to rail transportation because of labor disputes.

Under the RLA, collective bargaining agreements remain in force indefinitely until the parties agree to change them. Without a contract expiration date, negotiators do not work against a fixed deadline. Instead, they proceed through various steps, including compulsory mediation, designed to encourage negotiated settlements. Neither side can engage in “self-help” – a labor strike or a unilateral implementation of management terms – until these steps have been exhausted. The negotiations usually proceed as follows:

  1. Both sides serve proposed changes to collective bargaining agreements in the form of a “Section 6 Notice” (so-named for the section of the RLA in which it’s defined).
  2. Freight railroads employing more than 90 percent of unionized workers in the industry bargain on a multi-employer basis. Their representative, the National Carriers’ Conference Committee (NCCC), bargains with the national representatives of the unions.
  3. Bargaining talks continue until the parties reach agreement, or either side breaks off negotiations or requests mediation under the auspices of the National Mediation Board (NMB). The NMB also has authority to proffer mediation on its own.
  4. Once in mediation, the NMB controls the schedule of talks and the timing of release from mediation. There is no time limit to mediation. The goal of the NMB is to assist the parties in reaching agreement without resorting to self-help.
  5. If the NMB is unable to help the parties reach an agreement, it will offer binding arbitration, which either party may reject. If arbitration is rejected, a “cooling off” period must be maintained for 30 days.
  6. During this 30-day period or thereafter, the NMB may determine that the dispute threatens interstate commerce. It will then notify the President of the United States, who may appoint a Presidential Emergency Board (PEB) to investigate the dispute and recommend solutions. In these circumstances, PEBs have almost always been appointed in national rail disputes.
  7. If the President does not appoint a PEB, the parties may exercise self-help at the end of the 30-day cooling off period.
  8. If a PEB is appointed, it has 30 days to investigate the dispute and report its finding. Its recommendations are not binding, although they often lead to settlements.
  9. There is one final statutory cooling off period for 30 days after the PEB’s report is issued to give the parties further time to reach agreement before self-help is permitted.

In the 80-plus years since the RLA’s enactment, most rail labor negotiations have resulted in voluntary, peaceful settlements. However, Congress has stepped in to prevent or terminate crippling strikes following exhaustion of RLA procedures. Congressional measures have included additional cooling off periods to continue negotiations, implementation of PEB recommendations, and compulsory arbitration.

Click here to see our flow chart on Collective Bargaining Under the Railway Labor Act.