Few people know that union contracts do not just set minimum pay. The rates they stipulate are also maximum wages. Businesses may not pay employees more than they have negotiated with the union.
It may be surprising, but few unions allow individual raises. They prefer uniform group rates. Unions want workers to view them as the reason they are getting ahead. After all, why would a worker getting above the union rate pay dues? So unions usually (though not always) negotiate contracts that base pay on seniority and job classifications.
In fact, the National Labor Relations Board (NLRB) will strike down any higher pay that’s not in the contract. So when the Brooklyn Hospital Center rewarded its best nurses with $100 gift cards, the NLRB ordered it to cease and desist. The Register Guard Publishing Co. wanted to promote a new advertising contract. The company rewarded employees who sold ads under that contract with a commission — on top of their regular pay. The NLRB struck that down, too. Companies may not pay more than the union rate without their union’s permission.