Manager Signs Contract Possibly Beyond Authority: What are consequences?
April 12, 2018 9:36 PM Subscribe
For a labor organizer friend: A manager has signed their union's CBA contract but is now worried that they will be personally sued by the company for the generous contract provisions. Has this/does this happened/happen often? How severe was/is it?
Most useful would be any instances of case law - could be anywhere in the US - where this has happened and the outcomes of these cases. Second most useful would be any kind of legal write-ups on why this does/doesn't happen and what are the most usual consequences. Third, the opinion of an educated professional. (Yes, you are neither my lawyer, my friend's lawyer, nor the manager's lawyer. All the same!)
Most useful would be any instances of case law - could be anywhere in the US - where this has happened and the outcomes of these cases. Second most useful would be any kind of legal write-ups on why this does/doesn't happen and what are the most usual consequences. Third, the opinion of an educated professional. (Yes, you are neither my lawyer, my friend's lawyer, nor the manager's lawyer. All the same!)
I'm not sure I understand this scenario. Your friend randomly signed a CBA he was not authorized to sign? How does that even happen? Or did he agree to terms he was not permitted to agree to?
There's a fair amount of precedent on what happens when an agent exceeds his authority (google "agent principal ultra vires"), but this has a labor-law overlay which might completely change the analysis and which I'm not familiar with. Hopefully someone else is. But, as a practical matter, it's not easy to picture a scenario in which both (a) someone was insignificant enough in the organizational structure that no one else was paying attention so that he could do this and (b) he was rich enough, personally, for it even to begin to be worth the company trying to recover from him. I'd say he was at much greater risk of either being fired, or, if the company believes there was some kind of kickback, their attempting to interest local law enforcement.
posted by praemunire at 11:42 PM on April 12, 2018 [1 favorite]
There's a fair amount of precedent on what happens when an agent exceeds his authority (google "agent principal ultra vires"), but this has a labor-law overlay which might completely change the analysis and which I'm not familiar with. Hopefully someone else is. But, as a practical matter, it's not easy to picture a scenario in which both (a) someone was insignificant enough in the organizational structure that no one else was paying attention so that he could do this and (b) he was rich enough, personally, for it even to begin to be worth the company trying to recover from him. I'd say he was at much greater risk of either being fired, or, if the company believes there was some kind of kickback, their attempting to interest local law enforcement.
posted by praemunire at 11:42 PM on April 12, 2018 [1 favorite]
It seems likely that the union would have made sure that the manager was authorized to sign its CBA, so it's hard to imagine why the manager would be in any jeopardy.
And why is this question coming from your labor organizer friend? Why did the manager run to labor with his worries? Who are the characters in this drama and what's really going on here?
posted by JimN2TAW at 5:54 AM on April 13, 2018 [2 favorites]
And why is this question coming from your labor organizer friend? Why did the manager run to labor with his worries? Who are the characters in this drama and what's really going on here?
posted by JimN2TAW at 5:54 AM on April 13, 2018 [2 favorites]
Based on your question, I'm not clear about which of these scenarios (or some other scenario) happened:
1. Everything was done with due diligence throughout this whole process -- the manager was authorized to negotiate & sign, and the contract was appropriately reviewed by executives & counsel. However, the manager is worried that a higher-up is not happy with the contract after the fact.
2. Important process steps were skipped, for instance:
- Contract was not reviewed by company execs
- Contract was not reviewed by company's legal counsel
3. The manager went rogue and acted without the company's authorization in negotiating and/or signing the contract.
If the scenario is #3, the manager made a serious mistake which may invalidate the contract and/or get them fired. If the scenario is #2, both the manager and the company probably made some serious mistakes which may lead to negative fallout all around. If the scenario is #1, then the manager should be able to point to a correctly executed process to show that the executives/counsel signed off on this contract. I don't believe that suing the manager is a likely outcome in any of these cases; if they were negligent or exceeded their authority, it's my guess that they're more likely to get fired.
In any of these cases, it's a serious conflict of interest for the manager to be seeking help and/or legal advice from the labor side of the table, and that may cause big problems for the manager regardless of any of the other issues at play.
I'm not qualified to dig through the case law on this, and I bet your friend and the manager are not either. I'd seriously suggest that, if the manager is worried about this, they should quit seeking help from the labor reps and instead consult their own lawyer (or seek out a legal aid hotline or law clinic where they can get help/advice for free).
posted by ourobouros at 7:05 AM on April 13, 2018
1. Everything was done with due diligence throughout this whole process -- the manager was authorized to negotiate & sign, and the contract was appropriately reviewed by executives & counsel. However, the manager is worried that a higher-up is not happy with the contract after the fact.
2. Important process steps were skipped, for instance:
- Contract was not reviewed by company execs
- Contract was not reviewed by company's legal counsel
3. The manager went rogue and acted without the company's authorization in negotiating and/or signing the contract.
If the scenario is #3, the manager made a serious mistake which may invalidate the contract and/or get them fired. If the scenario is #2, both the manager and the company probably made some serious mistakes which may lead to negative fallout all around. If the scenario is #1, then the manager should be able to point to a correctly executed process to show that the executives/counsel signed off on this contract. I don't believe that suing the manager is a likely outcome in any of these cases; if they were negligent or exceeded their authority, it's my guess that they're more likely to get fired.
In any of these cases, it's a serious conflict of interest for the manager to be seeking help and/or legal advice from the labor side of the table, and that may cause big problems for the manager regardless of any of the other issues at play.
I'm not qualified to dig through the case law on this, and I bet your friend and the manager are not either. I'd seriously suggest that, if the manager is worried about this, they should quit seeking help from the labor reps and instead consult their own lawyer (or seek out a legal aid hotline or law clinic where they can get help/advice for free).
posted by ourobouros at 7:05 AM on April 13, 2018
Response by poster: From what I understand, the company did not officially designate anyone to be their bargaining representative, and labor’s bargaining representative was negotiating with the local..essentially store general manager with hiring/firing authority who assumed he could do this as he was able to negotiate other contracts on behalf of the company without having to ask permission and had not been told otherwise. He then negotiated what seemed a fair contract to him, but was a much better contract than labor had thought they would get. The manager then went home and at some point talked to a personal friend in the general labor community, who was like “holy shit you signed WHAT” at which point the manager panicked and went back to the labor representative and was like “you need to get rid of that contract because I think I might get sued.” The manager in question has no personal wealth, but is really freaked out about the possibility.
Organizer friend mostly wants to calm the manager down, without tearing up what is a really great (signed) contract.
posted by corb at 7:07 AM on April 13, 2018
Organizer friend mostly wants to calm the manager down, without tearing up what is a really great (signed) contract.
posted by corb at 7:07 AM on April 13, 2018
Organizer friend mostly wants to calm the manager down, without tearing up what is a really great (signed) contract.
Yeah, that is the essence of why this is a huge conflict of interest for the manager to have gone to the organizer for help. It sounds like both the company and the manager screwed up here, but the manager is being negligent at this point in not notifying the company. The longer the manager waits to deal with it, and the more help they get from the labor side, the worse this will likely be for them.
It may not be in your organizer friend's short-term interest to tell the manager all this, but I think it will be in their long-term interest to deal with the manager and the company in as upfront a manner as possible. It's inconceivable that there won't be negative fallout for labor if the company learns that a manager has essentially been misled into signing (and concealing from the company) a contract that they may not have been authorized to sign in the first place.
posted by ourobouros at 7:17 AM on April 13, 2018 [2 favorites]
Yeah, that is the essence of why this is a huge conflict of interest for the manager to have gone to the organizer for help. It sounds like both the company and the manager screwed up here, but the manager is being negligent at this point in not notifying the company. The longer the manager waits to deal with it, and the more help they get from the labor side, the worse this will likely be for them.
It may not be in your organizer friend's short-term interest to tell the manager all this, but I think it will be in their long-term interest to deal with the manager and the company in as upfront a manner as possible. It's inconceivable that there won't be negative fallout for labor if the company learns that a manager has essentially been misled into signing (and concealing from the company) a contract that they may not have been authorized to sign in the first place.
posted by ourobouros at 7:17 AM on April 13, 2018 [2 favorites]
Not a labor lawyer, this is a theoretical question.
Regardless of the ultimate outcome, trying to conceal this in any way will look far worse for the manager in the end. Whatever procedure there is for informing his company about other contracts he's entered into, he must go through it right away with respect to this one. The jump from fuck-up to cover-up is what really destroys your reputation and also puts you in peril of falling into genuinely unethical or illegal expedients.
Without the labor law overlay, if the company had otherwise behaved in such a fashion that the union could believe that the manager had negotiating authority, which it sounds like it might well have, the company might well end up stuck with the contract regardless (the doctrine is called "apparent authority"). Under state law generally, the more the company appears to be performing under the contract, the harder it would be to disavow the contract later, which makes it particularly important for the manager to make sure the proper people are aware of the contract. However, again, I don't know how labor law might affect this.
If your friend can afford a lawyer, he should consult one.
posted by praemunire at 7:56 AM on April 13, 2018 [2 favorites]
Regardless of the ultimate outcome, trying to conceal this in any way will look far worse for the manager in the end. Whatever procedure there is for informing his company about other contracts he's entered into, he must go through it right away with respect to this one. The jump from fuck-up to cover-up is what really destroys your reputation and also puts you in peril of falling into genuinely unethical or illegal expedients.
Without the labor law overlay, if the company had otherwise behaved in such a fashion that the union could believe that the manager had negotiating authority, which it sounds like it might well have, the company might well end up stuck with the contract regardless (the doctrine is called "apparent authority"). Under state law generally, the more the company appears to be performing under the contract, the harder it would be to disavow the contract later, which makes it particularly important for the manager to make sure the proper people are aware of the contract. However, again, I don't know how labor law might affect this.
If your friend can afford a lawyer, he should consult one.
posted by praemunire at 7:56 AM on April 13, 2018 [2 favorites]
I have been on the negotiating committee three times for my fairly large union local (600 or so members). We negotiated our labor contracts with officially charged people, including official labor VPs who handled labor relations among the multiple unions on campus. When contracts were signed each side had battled out the language, come to agreement, and the contracts were signed only by people officially designated as empowered to negotiate/enter into contracts with each other. Contracts are legal documents. I cannot imagine how this contract was negotiated and then signed without authority and input from the employer's legal and corporate office. The union should have had its own legal adviser. These are not issues that are details left until after the contract is voted on and then signed. If the contract proves invalid, the entire contract may have to be renegotiated with the actual, official party.
My urgent advice to your union organizer would be to refer this issue to a competent, experienced labor attorney. It might be that the contract is unenforceable, or it might in fact be enforceable, but in any case the union needs its own labor lawyer's advice. I would not recommend that the union depend on the boss's legal review to determine if the contract is legal and enforceable. Imagine if the contract slid through but was not ever reviewed for being legal and binding, and then in the middle of something huge - say a layoff - the company fights back with a dispute about the legality of the entire contract. This needs to be reviewed by competent legal people.
posted by citygirl at 8:06 AM on April 13, 2018 [4 favorites]
My urgent advice to your union organizer would be to refer this issue to a competent, experienced labor attorney. It might be that the contract is unenforceable, or it might in fact be enforceable, but in any case the union needs its own labor lawyer's advice. I would not recommend that the union depend on the boss's legal review to determine if the contract is legal and enforceable. Imagine if the contract slid through but was not ever reviewed for being legal and binding, and then in the middle of something huge - say a layoff - the company fights back with a dispute about the legality of the entire contract. This needs to be reviewed by competent legal people.
posted by citygirl at 8:06 AM on April 13, 2018 [4 favorites]
Response by poster: For reference, the individual in question was not sued.
posted by corb at 1:49 PM on May 13, 2018 [1 favorite]
posted by corb at 1:49 PM on May 13, 2018 [1 favorite]
This thread is closed to new comments.
It's also far more likely that the manager would be fired than sued. They can likely be fired for a good reason, a bad reason, or no reason at all (with a very few exceptions).
posted by cushie at 9:52 PM on April 12, 2018 [1 favorite]