Evergreen Clauses Trump the One-Employee Unit Rule: Third Circuit Fortifies § 9(a) Collective-Bargaining Agreements

Introduction

Case: Brian Trematore Plumbing & Heating Co., Inc. v. Sheet Metal Workers Local Union 25, SMART
Court: United States Court of Appeals for the Third Circuit
Date: 1 August 2025
Panel: Hardiman, Bibas, and Fisher, JJ. (Opinion by Hardiman; Fisher dissenting in part)

The dispute arose when Brian Trematore Plumbing & Heating (“Trematore”), a New Jersey mechanical contractor, attempted to shed its contractual and statutory obligations to Sheet Metal Workers Local 25 (“Local 25”). After two project-specific CBAs, the parties executed a § 9(a) agreement containing (i) an evergreen clause, (ii) a non-repudiation waiver, and (iii) a binding interest-arbitration clause. Years later, when Trematore no longer directly employed any sheet-metal workers, it invoked the “one-employee unit” rule to declare the CBA dead. The District Court rejected the defence; the Third Circuit now affirms, holding that the evergreen and arbitration provisions foreclose repudiation, even if only one (or zero) bargaining-unit employee remains.

Summary of the Judgment

• Jurisdiction: District Court properly exercised § 301 LMRA jurisdiction notwithstanding parallel NLRB proceedings because the dispute centred on alleged contractual rather than purely representational issues.
• Merits: Trematore remains bound by the 2015–2018 CBA as perpetually renewed. Its attempted repudiations (2019 and 2021 letters) were ineffective.
• Key Holding: The one-employee unit rule cannot override an evergreen § 9(a) CBA that also contains an explicit waiver of repudiation and a mandatory interest-arbitration mechanism.
• Arbitrability: The grievance over subcontracting HVAC sheet-metal work at Felician University falls squarely within the CBA’s arbitration clause.
• Dissent: Judge Fisher would have held that the one-employee unit rule applies to § 9(a) CBAs and that notice given in February 2021 effectively terminated the CBA at the close of its yearly term (May 31, 2021).

Analysis

1. Precedents Cited & Their Influence

• Stack Electric, 290 NLRB 575 (1988) & Foreign Car Center, 129 NLRB 319 (1960): foundational NLRB authority for the one-employee unit rule. The Third Circuit acknowledges these cases but distinguishes them because they involved no waiver or arbitration clause.
• Sheet Metal Workers’ Local 19 v. Herre Bros., 201 F.3d 231 (3d Cir. 1999) & Laborers Int’l Union v. Foster Wheeler, 26 F.3d 375 (3d Cir. 1994): clarify the distinction between § 8(f) “pre-hire” agreements and § 9(a) majority-support agreements. They set the backdrop for converting the Trematore agreement from § 8(f) to § 9(a).
• Laborers Health & Welfare Trust v. Westlake Dev., 53 F.3d 979 (9th Cir. 1995); J.W. Peters, 398 F.3d 967 (7th Cir. 2005); Baker Concrete, 820 F.3d 827 (6th Cir. 2016): appellate authority applying the one-employee unit rule to § 8(f) CBAs. The Third Circuit uses them as contrasts: none involved evergreen plus non-repudiation language.
• American Metal Products, 794 F.2d 1452 (9th Cir. 1986) & McElroy’s, 500 F.3d 1093 (10th Cir. 2007): pivotal for the proposition that a binding interest-arbitration clause can survive attempted termination.
• Textron Lycoming, 523 U.S. 653 (1998) & Vaca v. Sipes, 386 U.S. 171 (1967): cited for the scope of § 301 jurisdiction vis-à-vis NLRB exclusivity.

2. Legal Reasoning

The Court proceeds in three analytical moves:

1. Jurisdictional Reconciliation: Because the controversy concerns enforcement and interpretation of the CBA (a contract), § 301(a) empowers the federal courts even though unfair-labor-practice charges were also pending.
2. Contractual Interpretation: The evergreen clause automatically renews the contract yearly “unless” a timely written notice of reopening is served. No such notice was served. In addition, Trematore explicitly “waive[d] any right [it] may have to repudiate” during any term or extension. Ordinary contract principles require enforcing that promise.
3. Interaction with Statutory Doctrine: Even assuming (without deciding) that the one-employee unit rule could theoretically reach § 9(a) contracts, it cannot supersede privately negotiated provisions (evergreen, no-repudiation, arbitration) that contractually bind the parties beyond the presence of multiple employees. To hold otherwise would undermine federal policy favouring stable bargaining relationships and agreed-upon dispute-resolution mechanisms.

3. Impact of the Judgment

• Strengthening Evergreen Language: Employers can no longer rely on the one-employee unit rule as an escape hatch when their workforce shrinks, provided the CBA at issue is § 9(a) and contains non-repudiation plus arbitration language.
• Drafting Consequences: Unions will almost certainly insist on evergreen and interest-arbitration provisions; employers will negotiate notice windows and explicit termination rights. Contract language becomes paramount.
• Jurisdictional Clarity: The decision underscores that federal courts retain § 301 jurisdiction to adjudicate contract-enforcement suits even when facts overlap with pending NLRB charges.
• Potential Circuit Split: By refusing to extend Baker Concrete and J.W. Peters to § 9(a) situations with evergreen clauses, the Third Circuit differs in emphasis from Sixth and Seventh Circuit approaches, inviting possible Supreme Court review.
• Practical Compliance: Contractors who depart the union craft must still send formal written notices and complete interest arbitration before they are free of obligations—merely reducing headcount will not suffice.

Complex Concepts Simplified

• § 8(f) vs. § 9(a) Agreements
  § 8(f) (“pre-hire”) agreements are common in construction and do not presume majority employee support; either side can normally walk away after expiration. § 9(a) agreements arise after a union wins majority support and enjoy stronger statutory protections.
• Evergreen Clause
  A contractual provision that automatically renews the CBA for successive periods unless one party serves timely written notice to reopen negotiations.
• Non-Repudiation Waiver
  Language in which an employer relinquishes (waives) the right to renounce or cancel the agreement during its term or any extension.
• Binding Interest Arbitration
  A mechanism compelling the parties to submit unresolved bargaining for a successor agreement to an impartial board, which then imposes the terms—different from grievance arbitration, which interprets an existing contract.
• One-Employee Unit Rule
  An NLRB doctrine allowing an employer to withdraw recognition and obligations if it permanently employs one or no employees in the bargaining unit, premised on the idea that collective bargaining requires a collective.
• Repudiation
  In labour law, an employer’s unilateral termination of its recognition obligations and refusal to apply the CBA.

Conclusion

The Third Circuit’s precedential opinion cements a critical caveat to the oft-invoked one-employee unit rule: when parties have executed a § 9(a) CBA fortified by (i) an evergreen clause, (ii) an express waiver of repudiation, and (iii) a binding interest-arbitration requirement, an employer cannot simply declare the contract void because its bargaining-unit headcount dwindles. Contractual promises—and the federal policy favouring their enforcement—prevail. Employers must carefully follow contractual exit ramps; unions gain additional assurance that majoritarian recognition and bargained-for procedural safeguards will outlive short-term fluctuations in workforce composition. Whether other circuits will align with or resist this nuanced limitation may shape the next chapter in federal labour-contract jurisprudence.