During our most recent February 2022 membership meeting, the officers were asked whether contractual guarantees can still be enforced even as the pandemic changed the entire landscape of our performing field. The simple answer is yes. However, the pandemic made this issue far murkier than we could have anticipated. Three recent arbitration awards elucidate this point and they need to be considered when we write performance or payment guarantees in our contracts going forward.
On March 12, 2020 former Governor Cuomo issued an executive order that prohibited live performances at venues throughout New York State. The consequence of the order caused the loss of employment to countless numbers of performing artists and related professions throughout the state. Professional musicians were thrown into disarray by the lockdown, not knowing what impact it would have upon the collective bargaining agreements that established the terms and conditions of their employment. Many agreements contained specific force majeure clauses that excused employers from mounting performances because the pandemic was embraced by that clause, either explicitly or implicitly. In May 2020, I wrote an article that analyzed the impact of force majeure provisions in Local 802 agreements and the fact that many, if not all, of them meant that musical services could be canceled by employers without any payment made to musicians.
However, there are several collective bargaining agreements that Local 802 and other theatrical unions have that contain work or employment guarantees and no force majeure clause. When employers failed to satisfy the terms of those guarantees during the pandemic, unions such as IATSE and Local 802 grieved the employer’s failure to comply with those guarantees and ultimately pursued arbitration.
Last year three arbitration awards were rendered with respect to guarantees found within the collective bargaining agreements between Local 802 and the Brooklyn Academy of Music, Lincoln Center and New York City Ballet. These awards — issued by three different arbitrators based upon employment or performance guarantees contained in three separate collective bargaining agreements with three different unions — were disappointing. If employment guarantees cannot be enforced when employees are prevented from working, what value do these guarantees have? In effect, the “guarantees” actually guarantee nothing. Nevertheless, in hindsight, these awards were predictable and were based upon understandable contractual principles, which we cannot expect to occur with any frequency.
In Theatrical Stage Employees Local No. 4, IATSE v. Brooklyn Academy of Music, arbitrator Roger Maher grappled with contractual language that stated that “[e]ach stagehand on the basic crew shall be guaranteed a minimum of forty (40) continuous weeks’ work per year….” Mr. Maher determined that this guarantee was not actually a payment guarantee, but merely a guarantee that work would be provided if it was legally possible to do so. He noted that “the CBA provision that the union cites speaks only to ‘guaranteed weeks of work’ .. and does not guarantee 40 weeks ‘pay’ per year and contains no language setting forth an entitlement to pay in the absence of work or employment.” Since there was no guarantee of pay implicit in the work guarantee, BAM had not breached the agreement.
However, Mr. Maher, as did the other arbitrators, took the argument one step further. He noted that any work guarantee provision would be canceled by the twin legal doctrines of “impossibility of performance” and “frustration of purpose.” These doctrines state that where contractual performance is made impossible by extenuating circumstances — in this case an executive order barring performance — the performance guarantee is legally excused. These arbitrators noted that these doctrines have been applied to collective bargaining agreements even in the absence of force majeure provisions. Mr. Maher thus determined that there was no contractual violation despite the existence of the guarantee.
The other two arbitrations considered similar guarantees and found no contractual violations for much the same reasons (see Theatrical Protective Union Local No. 1 v. Lincoln Center for the Performing Arts [Cole] and Local 802 AFM v. The New York City Ballet [Peek]). It should be noted that the decision in our own case with the New York Cit Ballet found that “impossibility to perform” existed even after the executive order was lifted on April 2, 2021, crediting the employer’s testimony that there was no time to mount a performance after the ban was lifted. Further, in the Local 802 arbitration, the arbitrator held that the effects of the pandemic were unforeseeable, a legal prerequisite to establishing “impossibility,” even though the New York City Ballet had executed an extension agreement during the height of the pandemic. Both of these findings provide a ground to distinguish the musicians’ circumstances from the theatrical employees.
Nonetheless, without clear language establishing a payment guarantee, employment guarantees may ultimately be found unenforceable when performance impossibility exists.
What kind of language should we use in the future? Here’s an example of language with a payment guarantee in one of Local 802’s agreements that we believe would be enforceable: “Should there be fewer than five weeks scheduled or held, each member of the orchestra will nevertheless be paid for five full weeks.” We should consider language like this going forward.
Fortunately, situations where the doctrine of “impossibility” may be invoked are extremely rare. But these situations unfortunately happen when musicians need contractual protection the most. Therefore, whenever possible, we should strive to negotiate payment guarantees rather than work guarantees in our collective bargaining agreements.