This article is based on the experience of twelve San Francisco luxury hotels and labor union leaders who worked to change their highly adversarial relationship in the direction of greater trust and employee empowerment. It demonstrates that a cooperative approach is the most effective way to change the restrictive work rules that can impede profitability and quality in a highly unionized workplace. The hotels in San Francisco determined that they could achieve significant improvements if they could remove some of the major work rule restrictions in their labor contracts. They formed a multi-employer bargaining group and entered into a joint study with their unions to discover how the work might be made more productive for the hotels and more satisfying for the employees. As a result of this study, both sides concluded that they could benefit from a complete redesign of the labor contract. They then bargained successfully for a new labor agreement that created procedures for obtaining increased flexibility in the work rules and increased employee involvement in the operations of the hotel.