CBA Negotiations

A primer on lockouts in pro sports

Ahead of the expiration on Jan. 31 of the current collective bargaining agreement between MLS and the MLS Players Union, PSP contributor and labor lawyer Steve Holroyd began our look at the issues surrounding the negotiations for a new CBA with a primer on labor law and terminology. He continues with a look at the lockout in pro sports.

If you have questions about the MLS CBA negotiations, put them in the comment section or tweet them to PSP using the hashtag #MLSCBA2015. Steve will answer them in an upcoming post.

As we near the expiration of the MLS collective bargaining agreement, the players have begun to rattle their swords, threatening a strike as a real possibility.

While MLS has not countered with the threat of a lockout, recent sports history has shown that to be a real possibility.

While most everyone knows what a “strike” is — workers withhold their labor in order to put economic pressure on an employer to meet bargaining demands — lockouts are not as familiar to sports fans. So here is a quick primer.

What is a “lockout”?

Black’s Law Dictionary provides a simple, yet entirely complete, definition: “An employer’s withholding of work and closing of business because of a labor dispute.”

American labor law (found in the National Labor Relations Act) does not define “lockout.” The Canada Labour Code does, however, and provides about as good a summary as you will find: “‘lockout’ includes the closing of a place of employment, a suspension of work by an employer or a refusal by an employer to continue to employ a number of their employees, or to aid another employer to compel that other employer’s employees, to agree to terms or conditions of employment.”

Although MLS has three teams in Canada, it will likely fall under the jurisdiction of the National Labor Relations Board (“NLRB”) in the United States. For example, the NHL has allowed itself to be within the jurisdiction of the NLRB when the NHLPA has filed charges with the American agency. National Hockey League and its Constituent Member Clubs, 1999 WL 33454755 (N.L.R.B. Div. of Judges).  Accordingly, the following answers rely on American labor law. Bear in mind that, while Canadian labour law may have some significant differences, those differences may not come into play.

Why would MLS owners lock out the players?

In any bargaining session, both labor and management have sets of demands they want the other side to agree to.

The strategy, if employed by the owners, would be an offensive lockout — a lockout called by management to assert economic pressure on workers and, thus, gain a bargaining advantage over a union.

Are players paid during a lockout?

No — this is the “economic pressure” the owners would apply.

Are lockouts legal?

Yes.

Once upon a time, only defensive lockouts — ones that were called to prevent imminent and irreparable harm to an employer (e.g., employee sabotage) — were legal. Offensive lockouts were considered an impermissible means by an employer to strengthen its bargaining position.

In 1965, however, the United States Supreme Court in American Ship Building Co. v. National Labor Relations Board held that offensive lockouts were a legal means to exert economic pressure on employees, with certain limited exceptions.

When can the owners lockout players?

In many collective bargaining situations, there comes a point when one side or the other has moved as far as they are going to move with regard to proposals on the table. This point in negotiations at which agreement cannot be reached is called impasse.

Typically, strikes/lockouts do not occur until after impasse has been reached. This is because the parties feel that the “economic action” (i.e., strike or lockout) is the “push” needed to get the other side to move off certain proposals and agree to others.

However, impasse is not a requirement before locking out employees. That said, pre-impasse lockouts are examined by the NLRB and courts much more closely than ones that occur after impasse has been reached.

American labor law requires the parties to meet certain notice requirements and utilize the Federal Mediation and Conciliation Service (“FMCS”) before a “economic action” can take place. Generally, one party is required to give notice to the other 60 days prior to the collective bargaining agreement’s expiration date, and must notify the FMCS within 30 days of that notice of the existence of a dispute. If these conditions are met, parties may undertake “economic action” sixty days after the notice is given or upon expiration of the collective bargaining agreement, whichever is later.

Have the owners met these requirements?

The current collective bargaining agreement is set to expire on January 31, 2015.  Given the status of negotiations at this point, one must assume that the time targets have been met by both sides.

Is a lockout ever illegal?

The NLRB, the agency empowered with enforcing American labor laws, has stated that “assuming no motive to discourage union activity [i.e., joining or supporting the union] or to evade bargaining exists, the test is whether the lockout is inherently so prejudicial to union interests and so devoid of significant economic justification that no specific evidence of intent…is required.”

What if a lockout is illegal?

If the MLSPU believes that a lockout is illegal, it can file unfair labor practice charges with the NLRB. If the NLRB finds that the lockout is illegal, it may seek injunctive relief, ending the lockout. However, this action would not result in a new collective bargaining agreement and, after a suitable “cleansing period,” the league would be free to lockout players again.

Can MLS lockout players while still playing a season with replacement players?

In the United States, it is not unlawful for an employer to use temporary replacements during an otherwise lawful lockout. The “temporary” distinction is important, in that it means that if a union agrees to the employer’s terms, all of the “temporary” employees must be dismissed and the locked out workers brought back in.

In contrast, when an employee engages in an “economic” strike (in other words, one designed to prod an employer to provide better wages or benefits), he or she may be permanently replaced. This does not mean the employee loses his job, however. Rather, it means that, once a union accepts an employer’s proposals, or employees make unconditional offers to return to work, an employer does not have to fire replacement workers, and the strikers go on a “preferential rehire list.” As replacements leave employment through attrition, discharge, etc., ex-strikers are then returned to work off the list.

(If employees engage in an unfair labor practice strike (i.e., one protesting violation of the law by the employer), however, they are only “temporarily” replaced, as in a lockout situation. What constitutes an “unfair labor practice strike” will not be addressed here, since we are focusing on lockouts).

History has shown, however, that sports leagues are content to simply “shut down,” and continue without replacements. As a result, it is not likely that MLS will attempt to do so.

Can MLS players play in other leagues, like the North American Soccer League, while being locked out?

Yes. With the collective bargaining agreement expired and players locked out, there are no restrictions on players signing contracts and playing in other leagues.

The x factor in this scenario is FIFA: presumably, international football’s governing body may decree that MLS clubs retain the right to their players, even in a lockout, and prohibit their playing with other teams. If this occurs, expect to see anti-trust suits start to fly (as they did in 1967, when FIFA attempted to blacklist players who played in the unsanctioned National Professional Soccer League).

The only time I ever hear about lockouts is when a sports league — like the NFL or NBA — does it. Why is that?

A typical employer needs to be operating in order to stay in business. If it does not make a product, that product cannot be sold, and no revenue comes into the business. Not many business have the liquidity to withstand such a situation. Further, the offensive lockout-with-temporary replacements option is not very viable, for lots of reasons: it takes too long to train replacements, individuals won’t take a job knowing it is only temporary, etc.

Sports leagues, on the other hand, don’t have these problems — guaranteed TV money, season ticket renewals, licensing revenues, and the independent wealth of individuals owning teams gives sports leagues much more leverage over players, who only get paid if they are playing.

While it used to be that owners would not lockout, and would wait for players to strike (for example, MLB in 1972, 1981, and 1994-95; NFL in 1968, 1974 and 1987; NHL in 1992; North American Soccer League in 1979), they have since learned that they have a considerable economic advantage with a lockout, and are much more proactive about using the tactic.

How long would an MLS lockout last?

This is impossible to predict, of course, but it must be recalled that the NHL remains the only sports league to have lost an entire season (2004-05) to lockout, and lost significant parts of two other seasons (1994-95 and 2012-13).

While the recent NFL and NBA lockouts ended much more quickly, there are factors influencing players in both of those leagues that are not present with NHL players. Stated plainly, NHL players appear better-positioned to withstand the rigors of a lockout. Also, unlike NFL and (to a lesser extent) NBA players, NHL players have viable employment opportunities in Europe and Russia.

MLS players would appear to fall in between these two scenarios — while they have other employment opportunities, they also tend to make far less than NBA and NHL players.

Given the unmitigated public relations disaster that was the 2004-05 NHL lockout, would MLS actually go down that road?

Again, this is hard to predict…but keep a few things in mind.

First, even while crowing about significantly increased revenues over the past few years, MLS still believes it has issues that must be addressed. Soccer is not yet the NBA or NHL when it comes to TV revenues and such. As a result, the owners may insist on retaining the stringent cost controls — low salary cap, no free agency — that have enabled it to survive so far.

Second, the MLSPU knows about the improved TV contracts, increased revenue from soccer specific stadia, and large contracts given to Designated Players. Also, the MLSPU is aware that there are new owners in the league with deep pockets and money to spend (the Manchester City/New York Yankees alliance at NYCFC, for instance) who may themselves chafe against restrictions on abilities to acquire the best talent, leading to a “divide and conquer” scenario. To the players union, there may be no better time to hold out for a better contract than the present.

In short, the parties are geared for hard bargaining, to say the least. Whether this becomes a war before the start of the MLS season on March 6 remains to be seen.

6 Comments

  1. If I had to guess I think both sides will kick the can down the road for a bit. The MLS refs worked without a contract for years before getting locked out by the league last year. I think both sides will agree that this will make them seem reasonable and allow more time to negotiate.

    I also think if they do this it will make a strike/lockout inevitable.

  2. old soccer coach says:

    In other sports, I am thinking of baseball, in a strike year it was a commonly held expectation that the players reps on a club, especially the ones participating in leading the negotiations, would be let go at the end of that season. Did that sort of thing happen in the previous two CBA negotiations? Are Brian Carroll and Danny Cruz toast, in other words?

  3. Thanks for sharing your expertise Steve. I’m enjoying reading some of the basics of this showdown. Sadly, the CBA negotiations have been the most exciting part of this Union offseason.

  4. As powerful as FIFA is globally, I still assume they would take a very neutral position in any domestic league work disputes. Are there any examples more recent than the 1967 example cited of FIFA sticking their nose in on the side of either players or management (directly or indirectly)?

  5. Very interesting article, but one point- if FIFA is sued in a court, won’t FIFA just promptly kick or suspend the USA out of FIFA because they are not allowed to get involved in local judicial system?

    ‘The Associations shall also ensure that this stipulation is implemented in the Association, if necessary by imposing a binding obligation on its members’, reads the amended Statute, approved at FIFA’s 57th Congress in Zurich at the end of May. ‘The Associations shall impose sanctions on any party that fails to respect this obligation and ensure that any appeal against such sanctions shall likewise be strictly submitted to arbitration, and not to ordinary courts of law, unless the FIFA regulations or binding legal provisions specifically provide for or stipulate recourse to ordinary courts of law’.

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