The basics:

• AI, inflation and new labor laws are reshaping union negotiations
• Experts urge employers to plan contracts with long-term flexibility
• Rising healthcare, labor costs are complicating bargaining
• Clear communication, experienced counsel can help avoid disputes

When Day Pitney LLP Partner Rachel Gonzalez recently represented an out-of-state manufacturing client in contract talks, she hit a potential snag. “We provided higher-than-normal wage increases due to recent inflation,” Gonzalez recalled. “We reached agreement with the union leadership, but at the ratification vote the membership rejected the contract, largely out of fear that inflation would escalate over the next three years and they would be underpaid.”

Her team ultimately secured a deal without further wage concessions, “But it required significant education on what employees were currently getting, what they would receive under the new agreement, and what they could lose by striking,” she noted. “With a global pandemic, inflation, wars, large geopolitical changes, and massive technological shifts still front and center in people’s minds, it is increasingly hard to predict needs years ahead.”

New Jersey has long been known as a labor stronghold. Even as organized labor membership slips nationally – from 20% in 1983 to 10% in 2025, according to federal Census Bureau data – unions still account for nearly 15% of Garden State wage and salary workers. But as negotiations grow more complex, Garden State employers across industries are investing more in labor relations. We spoke with some experts to find out about best practices for a smoother negotiations.

Expert advice

Technology itself has become a bargaining issue, reported Gonzalez. “We are seeing much more focus on technology. AI, wearables, smart glasses, monitoring tools. Employers need to think several years ahead about how these tools may change their workforce and operations, and address that at the bargaining table. If they do not, they may find themselves limited in their ability to implement changes during the life of the [collective bargaining agreement], particularly where competitors are largely non-union and can move more quickly.”

New Jersey’s worker-protection laws add further complexity. “When worker-protection laws are enacted or amended in New Jersey, they add layers to collective bargaining,” Gonzalez said. “There’s no requirement to bargain over a law’s implementation, but where statutes are ambiguous, employers must negotiate the gaps.”

She pointed to CREAMMA [the state’s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act] as an example. “The law prohibits adverse action based on cannabis use outside of work,” she noted. “But unionized employers still need to address how drug testing, safety policies, and fitness-for-duty standards interact with the CBA.”

Benefits like paid sick leave and NJ WARN Act severance can also stack on top of contractual obligations. “That dual obligation can catch employers off guard if they are not planning for it at the bargaining table,” she detailed.

The goal is not just to respond to the issue in front of you, but to understand how today’s decisions may affect the business for years to come.
– Rachel Gonzalez, Day Pitney LLP Partner

Gonzalez’s advice: avoid two common mistakes. “The first is not fully understanding labor law. The second is not thinking far enough ahead,” especially with first contracts. “Once unfavorable language is in a CBA, it is much harder to remove or change later than it would have been to prevent in the first place.”

Her bottom line: “Get the right guidance early. The goal is not just to respond to the issue in front of you, but to understand how today’s decisions may affect the business for years to come.”

Finding solutions

Other Garden State labor experts are also seeking creative solutions for their clients. Flaster Greenburg PC Shareholder Adam Gersh recently helped an elder care facility navigate a contract negotiation. He found that workers were pushing hard for higher wages; a demand the facility “genuinely could not meet given constrained reimbursement rates.”

But instead of simply saying “no” to the union’s demands, Gersh shared government reimbursement data with the workforce, and proposed employee advancement tracks tied to higher-reimbursed services.

“I tried to show the workforce that ‘you’re asking for X, and we get paid X minus whatever for your services,’” he said. “But if you increase your skill set, which we will give you the opportunity to do, you have an opportunity to earn more while your employer also earns more.” The approach produced a contract Gersh says is working well for both sides.

He still sees another threat. “One of the most significant changes reshaping union negotiations in New Jersey is the steady expansion of state-mandated employee protections,” Gersh said, referring to safeguards now available to union and non-union workers alike. “That shift puts unions in a difficult position: their members expect them to deliver something better than what any worker can already get by law.”

Meanwhile, rising minimum wages and benefit costs squeeze the room unions have to negotiate above the floor. “New Jersey’s floor is higher,” Gersh said. “And I’m not so sure the ceiling is so much higher.”

Calling in the pros

He also sees a generational shift toward guaranteed pay, instead of incentive-based compensation. “I’ve seen contracts emphasizing guarantees over incentives,” particularly in auto sales, he said, where salaried models with unit bonuses are replacing commission structures.

Gersh ties this partly to pandemic-era anxiety: “I think you have a generation that looked at COVID, that looks at AI, that looks at an increasingly polarized economy and asks, ‘Is there a future for me here?’ If you don’t have hope, it’s hard to work hard.”

Gersh’s biggest warning for employers: negotiating without professional representation. “It leaves employers vulnerable to not understanding what they’re negotiating and not appreciating the unintended consequences,” he cautioned. “In a state with so many employee protections, that expertise is not optional. It is essential.”

Healthcare benefits

At Genova Burns LLC, Partner Paul Mazer points to a “perfect storm” of rising healthcare costs, unpredictable minimum wage hikes, and eroding federal mediation resources. On healthcare, “More workers are adding dependents – including adult children up to age 26 – because independent coverage through the Health Insurance Marketplace has become prohibitively expensive,” Mazer said. “And legislation recently signed by Gov. Mikie Sherrill, which will charge employers a per-employee fee when workers receive state-administered Medicaid benefits, could add yet another financial layer.”

A 2024 report issued by the state Department of Human Services identified 748 organizations – led by Amazon and Walmart – that collectively employed more than 132,000 people who received benefits under NJ FamilyCare, a publicly funded health insurance program that combines Medicaid and the Children’s Health Insurance Program. While the employer-fee legislation is primarily aimed at big companies, smaller employers may be burdened by reporting and other requirements.

Predicting minimum wage

Mazer also pointed to New Jersey’s minimum wage as an issue. “It is now tied to the Consumer Price Index,” he detailed. “Following the initial climb to $15 per hour, the minimum is adjusted annually — with the new rate announced each Sept. 30 for a Jan. 1 effective date. For employers negotiating multiyear contracts, that creates a serious forecasting problem. You don’t know what minimum wage is going to be next year, so when you’re trying to figure out a three-year contract, you have to look into a crystal ball.”

That’s because if the state’s minimum wage spikes in any given year, and the gap between contracted wages and minimum gets too narrow, “worker morale suffers,” he added. “Some employers have begun building automatic catch-up provisions into contracts — but unions understandably push back, asking why wages weren’t set higher from the start. And there’s only a 90-day window between the minimum wage announcement and its effective date, which means employers may have to scramble to negotiate a new wage rate.”

Why? The National Labor Relations Act requires that all terms and conditions of employment, including wages, must be negotiated, and cannot be unilaterally created and implemented by the employer, Mazer explained. “That 90-day renegotiation period sounds manageable, until you consider that holidays and year-end scheduling compress it dramatically.”

Mazer added that contract negotiations also suffered a blow when a helpful resource, the Federal Mediation and Conciliation Service, got slammed with a funding squeeze. “The FMCS once provided free, skilled mediators who could de-escalate tense negotiations and help parties resolve grievances short of arbitration,” he detailed. “But that resource has been significantly curtailed thanks to federal budget cuts. FMCS involvement is now largely limited to class action situations in only a few select industries. New Jersey’s State Board of Mediation can sometimes help fill the gap, but that agency’s resources are limited.”

His advice for any employer negotiating a first contract is straightforward: “Keep the structure simple, and think in decades rather than years,” counseled Mazer. “Wage schedules, seniority rules, and vacation accrual policies are extraordinarily difficult to renegotiate once established — and complexity baked in early generates costly disputes for years to come.

Mutual survival

Guy James, a veteran negotiator with the International Union of Journeymen and Allied Trades, recently spent nearly three months averting a strike at a New Jersey transportation company squeezed by fuel and healthcare costs. “Neither side wanted a strike, and neither side could afford a stalemate,” he said.

James argues that today’s bargaining, especially for small and mid-sized employers, is about mutual survival rather than confrontation. “The price of medical coverage today is astronomical,” he said. “We spend a lot of time at the table trying to give an economically feasible package to both the employer and to the members.”

Pushing an employer too far backfires on workers, too, he conceded. “If the proverbial cow is dry, nobody gets any milk.”

The biggest mistake employers make, James said, is assuming unions are inherently hostile. “Some employers come to the negotiating table with a preconceived notion that the union is going to take everything and be bullheaded … until they get to know that we’re here to create a good, positive working relationship and provide a retention tool.”

Some employers come to the negotiating table with a preconceived notion that the union is going to take everything and be bullheaded … until they get to know that we’re here to create a good, positive working relationship…
– Guy James, negotiator, International Union of Journeymen and Allied Trades

He sees a well-negotiated CBA as both a recruitment tool and a dispute-resolution mechanism that can help employers avoid litigation. James adds that labor and employers often share policy interests — pointing to recent state-level auto warranty legislation that raised manufacturer payments to dealerships, which benefitted technicians and owners.

Negotiations still get tense, James acknowledged. But the path forward is clear: “By dropping preconceived notions, focusing on clear communication, and recognizing shared economic realities, both sides benefit. Business owners and labor representatives can reach agreements that protect workers while keeping New Jersey businesses strong and solvent.”