Category: Workforce Trends

September 17, 2025

Negotiating Union Contracts in a High-Inflation Economy

Although inflation has cooled from its 2022–23 peak, it remains a defining factor at the bargaining table. Workers feel the cumulative effects of rising prices over the past several years. At the same time, employers face higher labor costs, escalating healthcare expenses, and demands for greater flexibility around where and how employees work. For employers with unionized workforces, these challenges are amplified. Negotiating union contracts is no longer just about splitting the difference on wage percentages—it is about balancing long-term financial stability with short-term employee expectations, preserving operational control while accommodating workplace changes, and finding creative ways to deliver value without locking in commitments that may become unsustainable if the economy shifts again.

This article offers employers practical strategies for negotiating union contracts in a high-inflation environment, focusing on three of the most contentious issues: wages, healthcare costs, and remote-work arrangements.

Inflation and Collective Bargaining

Inflation directly drives bargaining pressure. When the cost of groceries, housing, and transportation goes up, employees expect their wages to rise at least enough to maintain their standard of living. Unions will highlight members’ real-wage erosion and push for agreements that provide protection against continued volatility.

Employers have been here before. During the late 1970s and early 1980s, when inflation often hit double digits, cost-of-living adjustment (COLA) clauses became widespread in union contracts. As inflation moderated in the 1990s and 2000s, most employers phased out automatic COLAs, viewing them as too unpredictable and costly to maintain. Now, with inflation stabilizing but still running above the Federal Reserve’s 2-percent target, unions are again pressing for some form of inflation protection.

When preparing economic proposals, employers should:

Model affordability over the life of the agreement: Do not just budget year-to-year; understand what a multi-year wage pattern will cost when layered with healthcare, overtime, pensions, and roll-up effects.
Benchmark against industry peers: Unions will bring comparables to the table. Employers should know where they stand and avoid commitments that dramatically exceed local or industry norms.
Avoid long-term overcommitments: Be cautious with front-loaded increases or open-ended COLA clauses. What feels manageable today can become a liability if the economy slows and competitors are not living with similar terms.

Structuring Wage Increases

There is no one “right” way to build wage proposals, but employers should consider the following tools when negotiating union contracts:

Multi-year structures: Contracts can front-load or back-load increases. Front-loading provides workers with immediate relief but may leave employers paying above-market wages if inflation falls. Back-loading defers costs but risks resentment if inflation stays elevated. Many employers blend the two approaches, offering a strong first-year increase followed by smaller annual raises.
COLA triggers with caps: Rather than reinstating open-ended COLA provisions, employers can negotiate limited formulas. For example, wages could increase by a fraction of CPI, subject to a maximum percentage each year. This acknowledges inflation without handing over full control of wage growth to external forces.
Lump-sum bonuses: One-time payments can provide meaningful cash to employees without permanently raising base wages or compounding overtime, pension, and other benefit costs. Employers should, however, expect pushback from unions that prefer base-building increases for long-term earnings stability.
Tiered or differentiated increases: Wage increases can depend on seniority, skill level, or job classification. This can be a way to reward critical skills or long-service employees while moderating costs elsewhere. But employers should watch for morale issues and potential legal risks if disparities are too wide.

In every case, employers must ensure compliance with wage-and-hour rules, including minimum wage and overtime requirements under federal and state law. A wage package that looks good on paper can create compliance problems if it doesn’t account for legal requirements.

Managing Healthcare Costs When Negotiating Union Contracts

Healthcare costs are a perennial concern, and they are often one of the toughest issues in negotiating union contracts, especially in today’s environment of rising claims and specialty drug expenses. Employers are projecting annual cost increases well above general inflation. Unions know this and will often resist cost-shifting measures, framing them as benefit reductions rather than necessary adjustments.

Practical approaches include:

Employee cost sharing: Adjusting premium contributions, deductibles, or copays spreads costs more evenly. Employers should pair these adjustments with clear messaging that changes are designed to preserve overall benefit levels, not cut them.
Plan design changes: Options such as high-deductible plans, spousal surcharges, or dependent eligibility audits can provide meaningful savings. These changes, however, must be bargained carefully and communicated clearly to avoid perceptions of unilateral takeaways.
Wellness and preventive programs: Initiatives that encourage healthier lifestyles can reduce utilization over time. Framed correctly, these programs can be seen as joint investments in employee well-being.
Reserve funds or cost-sharing formulas: Some employers negotiate contract language that sets aside reserves or defines how future spikes will be shared. This can reduce conflict down the road when costs inevitably rise.

Employers should remember that health benefits are a mandatory subject of bargaining. Unilateral changes—even well-intended—can lead to grievances or unfair labor practice charges.

Remote Work and Flexibility

Remote work has emerged as one of the most complex bargaining issues since the pandemic. For many employees in relevant positions, the ability to work from home is now viewed as a standard benefit, not a temporary privilege. Unions may seek to embed remote-work guarantees in contracts.

Employers, however, must think carefully before committing. Remote work implicates productivity, supervision, safety, and even cybersecurity. Once written into a CBA, these arrangements can be hard to adjust.

Strategies for handling remote-work demands while negotiating union contracts include:

Pilots with sunset clauses: Agree to trial programs with defined end dates. This allows both sides to evaluate productivity and employee satisfaction without permanent commitments.
Clear management-rights language: Preserve employer discretion over work locations. Where possible, limit contract language to procedures (such as how requests will be considered) rather than entitlements.
Distinguish accommodations from entitlements: ADA or state law may require remote work as a disability accommodation in some cases. Those obligations should be addressed separately, not written into the collective agreement as universal rights.

Handled carefully, remote-work provisions can be structured in a way that provides employees with flexibility while ensuring employers retain control over core operational decisions.

Leaving Room to Adapt

In high-inflation environments, union proposals tend to be more ambitious. Employers need mechanisms that provide flexibility over time:

Side letters or MOUs: Use these for experimental provisions. They provide flexibility to test new ideas without locking them into the core agreement.
Reopener clauses: Tie reopeners to inflation thresholds, healthcare cost increases, or legislative changes. This ensures that both sides can revisit the contract if conditions change dramatically.
Strong management-rights clauses: Explicitly protect employer discretion on operations, staffing, technology, and scheduling. These clauses become especially valuable when economic conditions shift mid-contract.
Non-economic benefits: Consider creative alternatives—training, scheduling input, vacation flexibility—that can be highly valued by employees without carrying heavy ongoing costs.

Employers should also pay close attention to past practice and industry comparables. Arbitrators frequently rely on these benchmarks when interpreting disputed contract terms.

Practical Approaches to Negotiating Union Contracts at the Table

The bargaining process itself can shape outcomes as much as the proposals on the table. Employers should:

Be transparent but strategic: Share enough financial context to build credibility, but avoid “opening the books” in ways that limit flexibility later.
Prepare detailed costing models: Understand the true cost of each proposal, including wage roll-ups, overtime, and pension implications. A one-percent wage increase often costs far more than one percent once these effects are included.
Use interest-based bargaining where appropriate: Focusing on mutual interests—such as stability, recruitment, and sustainability—can sometimes open the door to creative solutions that meet both parties’ needs.
Stay consistent and credible: Bargaining is as much about trust as economics. If management develops a reputation for following through on commitments and maintaining consistent positions, unions are more likely to engage constructively.

For employers, negotiating union contracts during high inflation requires not only careful costing but also a clear communication strategy that builds credibility with both union leaders and employees.

Conclusion

High inflation creates challenges for both sides of the bargaining table when negotiating union contracts. Unions want to protect members’ purchasing power; employers must guard against unsustainable cost growth. But with careful planning, creativity, and a willingness to use flexible tools, employers can negotiate agreements that provide meaningful improvements without jeopardizing financial stability.

The most effective strategies combine structured wage proposals, proactive healthcare cost management, cautious approaches to remote work (where applicable), and adaptive bargaining mechanisms such as side letters and reopeners. Employers who enter negotiations prepared, consistent, and transparent are best positioned not only to reach agreements in this inflationary environment, but also to build stronger long-term labor relationships.

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May 3, 2025

Conducting a New York Independent Contractor Audit

If your business relies on independent contractors—whether in New York or elsewhere—you’ve likely heard that misclassification can lead to serious legal trouble. But for companies with individuals physically performing services in New York, the risks have only intensified in recent years. That’s why now is the time to perform a New York independent contractor audit of your existing relationships.

Why This Matters Now

New York State has significantly expanded protections for freelancers and increased its scrutiny of worker classification. With the 2024 enactment of the Freelance Isn’t Free Act and ongoing state and federal enforcement actions, it’s more important than ever to evaluate whether your independent contractor arrangements truly comply with the law.

Misclassifying an employee as an independent contractor can lead to liability for:

Unpaid minimum wage and overtime
Unpaid unemployment insurance and workers’ compensation contributions
Interest and penalties from tax authorities
Legal fees and liquidated damages in private lawsuits
Liability under New York’s Freelance Isn’t Free Act

In addition, enforcement efforts are increasing:

The New York State Department of Labor (NYSDOL) continues to aggressively investigate misclassification claims.
The IRS and state/local tax authorities remain interested in employer tax compliance.
Private litigation and class actions are becoming more common, particularly where workers are denied benefits or final payment.

Bottom line: if someone is working in New York—physically, even remotely—your business may be subject to New York’s worker classification rules, regardless of where your headquarters or other business locations are located.

Step 1: Know the Legal Standard (It’s Not the Same Everywhere)

In New York, the legal tests for employee vs. contractor status vary depending on the law at issue. That complexity is a common pitfall for employers.

For Wage and Hour Purposes:

New York follows a multi-factor “economic realities” test, similar to the federal DOL standard. The core question: Is the worker economically dependent on the business or truly in business for themselves?

Relevant factors include:

The degree of control the business exercises over the work
The worker’s opportunity for profit or loss
The permanency of the relationship
The extent to which the work is integral to the business
The skill and initiative required
The extent of the worker’s investment in tools or equipment

No one factor is determinative. Control is important, but courts and agencies look at the totality of the relationship.

For Unemployment Insurance:

New York applies a worker-friendly test, meaning it is easier for a worker to be deemed an employee eligible for unemployment insurance. The NYSDOL looks primarily at whether the employer exercises any degree of supervision, direction, or control over the worker’s services. This includes not just direct oversight, but also indirect control, such as setting hours, assigning work, or requiring status reports.

As a result, a worker may be classified as an independent contractor for federal tax purposes under IRS standards, yet still be considered an employee for New York unemployment insurance eligibility.

For Freelance Isn’t Free Act Compliance:

Even if the contractor is properly classified, businesses must comply with New York’s new requirements for freelance contracts. For independent contractors in New York earning $800 or more, a written contract must exist, identifying payment timelines and retaliation protections.

Click here for more on New York’s Freelance Isn’t Free Act.

Step 2: Conduct an Internal Audit

An internal audit is your best defense against future liability. Start by identifying anyone providing services to your business who is not on payroll. Then, for each worker:

1. Document the Relationship

Do you have a signed contract?
Does the contract describe an independent business relationship, with clear project-based deliverables and no guarantee of ongoing work?
Is the contract consistent with how the relationship works in practice?

2. Evaluate Control

Who sets the worker’s hours?
Where is the work performed?
Who provides tools, equipment, and software?
Do you require regular check-ins or approval for routine tasks?

3. Assess Economic Independence

Does the worker have other clients?
Do they advertise their services publicly?
Can they subcontract the work or delegate it?

4. Examine Duration and Integration

Has this person worked with you for years on repeat assignments?
Is their work central to your business function?

Red flags may include:

Contractors working set hours or reporting to a manager
Use of internal email addresses or being listed on the company website
Reimbursement of expenses that should be borne by the contractor
Prohibitions on working for other clients

In most cases, there are no single factors that are entirely determinative of the proper classification. Multiple criteria must be considered. But the presence of any of the above red flags should generally trigger further analysis.

Step 3: Address the Risks

After identifying questionable arrangements, you have a few options:

Option 1: Reclassify as an Employee

This may be the safest course, especially if the worker is full-time, works under close supervision, or performs a core function of your business.
It may also open access to benefits, improve morale, and reduce turnover.

Option 2: Restructure the Relationship

Limit control and supervision.
Update the contract to emphasize the contractor’s independence.
Avoid integrating the worker into your business structure (e.g., no internal email, no title).

Option 3: Continue the Relationship with Mitigation Measures

Require evidence of the contractor’s separate business (e.g., EIN, business insurance, W-9).
Educate your managers on boundaries to maintain independence.
Set project-based deliverables with defined scopes and deadlines.

Step 4: Consider the Impact of Remote Work

Employers sometimes overlook that remote workers still “perform services” in a physical location—namely, wherever they are sitting with their laptop. If that’s New York, your business may need to:

Register for a New York employer ID
Comply with NY wage and hour laws
Withhold and remit NY state taxes and unemployment contributions
Follow the Freelance Isn’t Free Act if you engage independent contractors based in New York

Step 5: Train and Monitor

The law is clear: labels don’t matter—substance does.

Train your managers and HR personnel not to treat contractors like employees. Common mistakes include:

Directing day-to-day work
Including contractors in internal Slack or Teams channels unrelated to their assignment
Having contractors attend staff meetings or performance reviews

Monitor the relationships over time. What starts as a one-off project can evolve into an employment relationship if not carefully maintained.

Don’t Ignore This Potential Source of Serious Liability

The financial implications of improper classification depend on how many people are involved, the volume of their work, and other considerations. But it can result in fines, penalties, backpay, liquidated damages, and more. All of that adds up quickly and, in some cases, the liability can accrue to individuals, such as business owners, who may not be able to easily escape it even through bankruptcy or other business dissolution.

If you’re unsure whether your contractor relationships would withstand scrutiny from the NYSDOL, the IRS, or a plaintiff’s attorney, now is the time to act. And if you engage any freelancers in New York—whether directly or through third parties—you’ll want to ensure that your contracts and processes are updated to comply with both classification standards and the Freelance Isn’t Free Act.

Given the complexity of the applicable classification standards, consulting with an experienced employment attorney is recommended if there is any uncertainty whether someone is properly treated as an independent contractor.

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November 25, 2024

Trump Surprises with Proposed Secretary of Labor Nominee

In a move few saw coming, President-elect Donald Trump announced Friday that his Secretary of Labor nominee is Republican Representative Lori Chavez-DeRemer of Oregon. Chavez-DeRemer is a politician with a track record of siding with both labor and business interests.

Chavez-DeRemer’s nomination has sparked significant attention due to her co-sponsorship of the Protecting the Right to Organize (PRO) Act—a bill that would dramatically expand labor rights and weaken right-to-work laws in nearly 30 states. Her cross-aisle appeal, exemplified by support from Teamsters President Sean O’Brien and prominent Democrats like Senator Patty Murray, stands in stark contrast to Trump’s historically pro-business labor agenda.

A Bipartisan (?) Pick with Union Support

Teamsters leader Sean O’Brien lauded the choice for Secretary of Labor nominee. He noted Trump’s outreach to his union last year and framed Chavez-DeRemer as a unifying figure for workers and businesses. “Now let’s grow wages and improve working conditions nationwide,” O’Brien said, signaling optimism about the nominee’s potential impact.

Chavez-DeRemer, a former mayor of Happy Valley, Oregon, and entrepreneur in the healthcare field, lost her reelection bid earlier this month but left Congress with a distinct reputation. As one of the few GOP members to align with progressive labor goals, her nomination has already garnered praise from unions, including the National Education Association and the American Federation of Teachers.

Reaction from Conservatives

The announcement has provoked backlash from influential conservative groups. Americans for Prosperity, a staunchly pro-business organization, criticized the nomination, arguing it betrays Trump’s previous labor policies and risks alienating his base.

“Trump’s record on labor policy was so strong, and he didn’t flip on a single labor issue yet still improved with union voters,” said AFP’s Akash Chougule. “He completely undid that and undermined his own agenda and movement by picking a teachers union hack for Labor. Senate GOP should reject this nomination.”

Chavez-DeRemer’s pro-labor stance—embodied in her support for legislation like the Public Service Freedom to Negotiate Act—has drawn ire from right-to-work advocates who view her as out of step with Republican orthodoxy.

Immediate Challenges for the Department of Labor

If confirmed, Chavez-DeRemer will face several pressing issues at the Department of Labor. Among the most urgent is the long-awaited update to the Fair Labor Standards Act (FLSA) salary exemption test. The Biden administration proposed increasing the salary threshold for exempt employees—potentially expanding overtime eligibility for millions of workers. A federal court recently struck down the rule, and the new administration will have to decide whether to appeal or walk away from the rule. Business groups have expressed concern over the financial burden of such changes, while labor advocates argue that the update is long overdue to ensure fair pay for workers.

Chavez-DeRemer will also have to address broader labor market challenges, including:

Modernizing worker classifications to reflect the evolving gig economy, a contentious issue that pits tech companies against labor advocates.
Reevaluating federal regulations on independent contractors and joint employers, key concerns for both unions and businesses.
Enforcing compliance with labor standards while balancing business concerns about regulatory overreach.

Her ability to navigate these challenges will define the department’s trajectory under the new administration and could influence how workers and businesses view Trump’s labor policies moving forward.

What This Means for Trump’s Labor Agenda

This nomination signals a potential shift in Trump’s labor policy approach. While his first term focused on deregulation and business-friendly initiatives under Labor Secretaries Alexander Acosta and Eugene Scalia, Chavez-DeRemer’s selection could open the door to more balanced policies aimed at addressing worker concerns.

Her ability to navigate confirmation in a polarized Senate remains uncertain. However, her potential bipartisan appeal, bolstered by endorsements from unions and some Democrats, positions her as a viable, albeit controversial, choice to lead the Department of Labor.

A Nominee with a Unique Profile

Chavez-DeRemer’s nomination follows a line of Trump labor secretaries with diverse backgrounds, but her record stands apart. A Latina entrepreneur and former mayor, she combines business experience with a legislative focus on worker rights—a combination that may redefine the Labor Department’s priorities under Trump’s second administration.

Whether this move represents a new chapter in Trump’s labor policy or a temporary departure from his traditional approach, one thing is certain: Lori Chavez-DeRemer’s nomination has set the stage for a heated confirmation battle and a possible recalibration of how the federal government balances labor and business interests.

Just One Part of the Equation

Even if Chavez-DeRemer is confirmed to head the U.S. DOL, the administration will be more business-friendly. Her views are not shared with other Republicans in Congress, making pro-union or worker amendments to federal law unlikely. Plus, the National Labor Relations Board has more direct control over much of the field of employer-union relations. Through other appointments, President Trump is still likely to effect significant rollbacks from pro-labor interpretations of the National Labor Relations Act that have stifled employers during the Biden administration.

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