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At the beginning of the New Year, BOMA New York sat down with Howard Rothschild and Rob Schwartz, President and Executive Vice President respectively of the Realty Advisory Board on Labor Relations (“RAB”). The conversation unveiled many examples of how best to understand and approach present day labor relations issues in New York City and other major cities across America.
As the city continues to rebound from the pandemic, BOMA NY Chairman Matt Duthie, who is also a long-time board member of the RAB, described the organization succinctly. He said, “They are indispensable.” City and State magazine lists Mr. Rothschild as part of its Real Estate Power 100. After reading our interview with both legal experts, commercial real estate professionals will quickly agree with Duthie’s characterization of the RAB. Here’s our Q & A:
BOMA NY: Over eight-plus decades, the RAB has had a superb track record of representing real estate employers in negotiating contracts with organized labor unions, especially Local 32BJ and Local 94 in New York City. To what do you attribute this success?
Rothschild: All you need to do to be successful is to have good relationships and solve problems. All the rest is static.
Schwartz: (Somewhat tongue-in-cheek) The best solutions are when everyone walks away feeling equally unhappy.
BOMA NY: That’s a great way to set the stage. How did the RAB get founded? What are its roots?
Rothschild: In the early 1930s, the building service workers started to organize in New York City. The building owners’ initial response was to put an end to that, and battles ensued between the sides.
After these battles passed, each side realized that the other would always be there, so over the next many years the relationship matured. We entered into a series of collective bargaining agreements. The RAB became the industry’s organization for dealing with labor and employment issues with its union-represented workforce.
BOMA NY: Was there a tipping point or a last straw incident?
Rothschild: Many decades ago, there was a strike that began in the Garment Center. As may recall all the elevators at the time were manually controlled. An operator took the elevator up without announcing “Going up!”, and he was fired for that. That started a rampage. There was fighting in the street. The Mayor wanted to put a stop to it, but at first, neither side would negotiate with each other.
So, in 1934 or ’35, an arbitrator named Curan heard each side’s position and issued an arbitration award detailing the industry standards. This situation was the genesis of our collective bargaining agreements. During this time the RAB and other organizations like the National Labor Relations Board were born. Today, because of our long-term relationship with the building service unions, we have unbelievably good relationships, particularly with 32BJ and Local 94.
We meet regularly because we have so many common interests. It’s much better if both sides are proactive than reactive.
BOMA NY: What are some recent case studies or examples?
Rothschild: In April we negotiated the Apartment Building Agreement with 32BJ that covered 3,200 apartment buildings in New York City and 32,000 union members. In December we negotiated the new Local 94 contract that covers operating engineers in about 500 commercial buildings and 1,300 schools in the city.
BOMA NY: If the unions are a collective of workers, then is the RAB a collective of landlords?
Rothschild: We are a collective of employers. We’ve grown in terms of whom we represent and the geography of our members. For example, commercial cleaning contractors employ most of the workers in commercial buildings. Overall, our membership’s buildings have about 24,000 workers, and probably 17,000 of them are employees of commercial cleaning companies, members of 32BJ. Our owners employ about 7,000 commercial cleaning workers.
We recently took on representation of all the employers of the metal polishing and also represent window cleaning companies and the employer of maintenance employees in all of the NYC public schools. We also represent buildings outside New York, that are owned by our members. We have about twenty buildings in Chicago. The expertise we have can carry over to other places.
BOMA NY: How does the RAB look different today from earlier decades?
Schwartz: The RAB has become much more professional and sophisticated in how it approaches negotiating contracts and deals involving grievances and arbitration. What I’ve seen is not only a broadening of the RAB’s horizons in terms of the legal options we offer, but also in terms of the services we offer our members.
We moved to 1 Penn Plaza in 2018. We really upgraded the image of the RAB from the old, closed world into a modern professional office. It was at that time that we initiated a rebranding of the organization, the implementation of a more robust website and the installation of new technology.
Rothschild: We have become the industry experts in union contract negotiation, as well as interpretation of our collective bargaining agreements. We represent our member Employer at grievance meetings and arbitration hearings at no additional cost. We also serve as Trustees on the various Union Funds and have an intimate knowledge of their operation. Over the last few years we have strategically dealt with many Union Fund issues as an exercise decoupled from contract bargaining. That has reduced potential strike issues. In addition, we now represent Employers in claims of employment discrimination that are directed to arbitration.
Over the years we’ve expanded our scope of services to serve all sorts of companies in New York City, from small firms to global corporations. There is no one out there who has greater expertise because we live and breathe this stuff every single day.
BOMA NY: Please explain the “Most Favored Nations” clause in your contracts.
Rothschild: We negotiate an industry contract first, and we set the industry standard. . (In exchange) the Union cannot offer anyone else a better deal. Non-RAB Union contracts may have the same base economic terms, but are worse than ours relating to work rules, reduction in force, and termination.
As an example we have an anti-discrimination provision in our contracts that provides for arbitration instead of relief in court. This provision is not contained in the non-RAB contracts. . We worked very hard to get that provision into the Union contract. At one point the provision was challenged, and we went all the way up to the U.S. Supreme Court. The court ruled that the provision was legal and enforceable – a very cost-effective option for employers.
BOMA NY: You referenced the apartment workers agreement in April 2022; which averted a massive strike. The media described the union's perspective as a "win." What's your perspective?
Schwartz: It was a win for the union – and it was a win for the employers as well. For employers, it’s paramount to avoid a work stoppage and maintain the integrity of their business. For employees, it’s also avoiding a work stoppage because they don’t get paid during a strike, and often they never recover the wages they lost during a work stoppage. It’s a ‘mutually assured destruction’ situation.
Strikes and lockouts are the nuclear weapons of the labor world. You try to use everything in your arsenal to avoid them. In the relationship we’ve developed with 32BJ and Local 94, we avoid having to use the nuclear option by knowing what’s really important to each other – continuing the integrity of the business.
Rothschild: As Rob said, it was a win all around. Employees received a large wage increase that was offset by an extremely low increase in the cost of health insurance. In addition, employees received a one-time bonus of $3,000 which was offset by a reduction in the health insurance contribution of $3,700. This was a win for the Employers, a win for the Union and a win for our workers.
BOMA NY: It’s nearing two-years on the 4-year contract for benefits and wages of office security guards and window cleaners. Are you so proactive that you begin the process several years out?
Rothschild: Yes, it can be, but when you have a contract negotiation, you have a tremendous number of issues you’re dealing with simultaneously. The key is to get certain issues off the table before you start officially bargaining with the union.
For example, health insurance is the second most expensive cost for employers. By finding various ways to save dollars on health insurance, this has benefitted employers and employees in the industry. One recent change will save Employers $32 million for 2022 in the cost of health benefits. Another example is our work during Covid where we negotiated nineteen separate Agreements with Local 32BJ to change the standard contract terms. Because of our depth and breadth of knowledge we were able to step in quickly and decisively, while maintaining peace and harmony in our industry, as well as build good-will with our Union counterparts. Ultimately, these Agreements benefited both our employees and our employers.
BOMA NY: How did you successfully negotiate a contract that required all union members in both commercial and residential buildings to be vaccinated against Covid?
Schwartz: It was a lot less complicated than you would assume. We went to an initial arbitration which found for our employer-member that we could impose a vaccination requirement for health and safety under our contract. We took that back to the union and said we could arbitrate hundreds of these cases, or we could move forward and move past this.
BOMA NY: What value does BOMA bring to the RAB?
Schwartz: We rely on BOMA and REBNY for knowledge bases we don’t possess, particularly in the political and regulatory world where we’re not really engaged.
Rothschild: When you look at our memberships, they’re often the same companies and in many cases, the exact same people. Each of us try to stay in our lane. But if we see that we can help each other, we do. A great example of our partnership are the webinars we produced during the pandemic in collaboration with BOMA New York and REBNY.
BOMA NY: What’s on tap in 2023 for the RAB? and what would you like to tell our respective members
Rothschild: We have a big issue with the cost of hospitals and physician services which are the major drivers of the cost for healthcare.
At the end of this year we have the Commercial and Contracts Agreements expiring with 32BJ. In addition, we have site-based negotiations every day and we keep employers compliant with their contracts. With this we are often asked to be proactive and reach out to the unions, and deal with the issues at hand.
Schwartz: We hear you on where the commercial market is in the world right now, and the issues that everyone is facing. We will bring these issues to the negotiating table.
