Legal Definitions - open-shop–closed-shop operation

The term open-shop–closed-shop operation is synonymous with a double-breasted operation. It describes a business structure where a single employer, or a group of commonly owned or controlled entities, operates two distinct companies:

• One company is unionized (often referred to as a "closed shop" or "union shop," where employees are required to join the union or pay union dues as a condition of employment).
• The other company is non-unionized (an "open shop," where union membership is not a condition of employment).

This strategy allows a business to engage in both union and non-union work, often to gain competitive advantages, manage labor costs, or maintain flexibility in different markets or for specific types of projects. The legality of such operations often depends on whether the two entities are truly separate and distinct for labor law purposes, or if they are merely an attempt to evade union contracts.

Here are some examples illustrating this concept:

• Example 1: Construction Industry

  A large construction conglomerate, "Apex Builders Group," owns two separate construction companies. One, "UnionCraft Commercial," specializes in large-scale public works projects and commercial high-rises, operating under a collective bargaining agreement with a major construction union. Its employees are union members, and it adheres to union wage scales and work rules. Apex Builders Group also owns "FlexiHome Residential," which focuses on building residential homes and smaller private developments. FlexiHome Residential operates as a non-union entity, hiring non-union labor and offering more flexible terms and conditions of employment. This allows Apex Builders Group to bid on both union-mandated commercial jobs and more cost-sensitive residential projects without being entirely bound by union agreements across all its operations.

  This illustrates a double-breasted operation because Apex Builders Group, as the common owner, operates both a unionized entity (UnionCraft Commercial, effectively a closed shop for its projects) and a non-unionized entity (FlexiHome Residential, an open shop).

• Example 2: Manufacturing Sector

  "Global Auto Parts Inc." manufactures various components for the automotive industry. It operates a plant in the Midwest, "Precision Machining Solutions," which has a long-standing union contract with a prominent industrial union. This plant produces highly specialized, custom-engineered parts, leveraging the skilled union workforce. To remain competitive for more standardized, high-volume parts, Global Auto Parts Inc. also owns and operates "Standard Component Assembly," a non-union plant located in a different region. This non-union plant produces commodity components with a more flexible workforce and lower labor costs, allowing the company to serve a broader market segment.

  This demonstrates a double-breasted operation as Global Auto Parts Inc. maintains both a unionized manufacturing facility (Precision Machining Solutions, effectively a closed shop) and a non-unionized facility (Standard Component Assembly, an open shop) under common ownership.

• Example 3: Logistics and Transportation

  "TransContinental Freight" is a major trucking and logistics company. Its long-haul trucking division, which handles interstate freight for large corporate clients, is largely unionized, with drivers belonging to a national transportation union. This ensures consistent labor standards and benefits for its long-distance routes. However, TransContinental Freight also operates a separate local delivery and warehousing division, "Metro Express Services," which handles last-mile delivery and local distribution within metropolitan areas. Metro Express Services employs non-union drivers and warehouse staff, allowing for greater flexibility in scheduling and staffing to meet often fluctuating local demand and competitive pricing pressures.

  This is an example of a double-breasted operation because TransContinental Freight operates a unionized entity (its long-haul division, effectively a closed shop) and a non-unionized entity (Metro Express Services, an open shop) to manage different aspects of its business.