PPG’s Two-tier Wage Structure, Cuts Not in Violation of Union Arbitration Award

May 20, 2014

The Seventh Court of Appeals affirmed May 9 that PPG Industries did not violate an arbitration award to the United Steelworkers by unilaterally implementing a two-tier wage system that lowered production and maintenance employees' pay at an Illinois glass manufacturing plant.

According to the court, PPG in April 2009 sought to modify its bargaining agreement with USW to reduce labor costs at a Mt. Zion, Ill., plant. PPG and the union initiated an official negotiating conference on June 1, during which the company reiterated its desire to lower labor costs and establish a two-tier pay structure. The company then proposed pay cuts for employees in both tiers during the next two days of the conference. 

Affirming summary judgment for PPG, the Seventh Circuit rejected the union's argument that the company's compensation cuts should be rescinded because the arbitrator determined that, when proposed during a negotiation conference, the cuts were untimely under a collective bargaining agreement's modification provisions.

The appeals court said the arbitrator's award didn't prohibit PPG's actions because the union had been aware that “economic concessions from existing employees were on the table” prior to the proposal deadline. “[N]either the text of the arbitrator's decision nor the arbitration record supports the Union's desired interpretation of the award,” the court said. “To accept the Union's arguments, we would have to substantively alter the award in the Union's favor. Because we may not do so, we affirm.”