By Dr. Gary L. Deel, Ph.D., J.D.
Faculty Director, School of Business, American Public University
(Note: This article contains content adapted from lesson material written for APUS classes.)
This is the ninth article in a 10-part series on the dynamics of union and employer relations in the United States.
In the previous part, we discussed how modern workplace transformation through flexible scheduling models is altering union-employer dynamics. Now, we’ll examine how arbitration is often used to settle disputes between employers and unions over collective bargaining agreements.
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Although arbitration is not mandated as a means of dispute resolution for union-employer relationships, it is strongly encouraged by courts for reasons of efficiency and value. Arbitration has been traced as far back as 2,000 years ago. Traditional arbitration was thought of as a “people’s court” of sorts, where disputants could settle conflict in a binding way without the complexity of formal court proceedings.
This type of system was widely adopted in social institutions such as churches and ethnic communities. It was appealing in the sense that the customs and values of such environments — often more familiar to the disputants than the seemingly esoteric rules of formal law — might have a greater weight in the outcome.
However, over time, what once was a people-driven alternative to litigation became a more formalized, codified and established process in the modern justice system. Arbitration was eventually included in The Labor Management Relations Act of 1947, better known as the Taft–Hartley Act.
This law became a principal means of resolving conflicts between unions and employers. Since then, the procedural codifications and formal regulations of arbitration have been significantly expanded through Supreme Court decisions and other legislative acts.
Arbitration Clauses Are Commonly Included in Agreements between an Employer and a Union
Recognizing the benefits of reduced costs associated with arbitration (when compared to formal litigation), many unions and employers have made a tradition of including mandatory arbitration clauses in their bilateral agreements.
Arbitration is still a binding form of dispute resolution and a private process, closed to the public eye unless both parties agree otherwise. And because much of today’s arbitration proceedings are so complex that disputants benefit significantly from the specialized (and very expensive) skills of legal counsel, large companies with considerable capital can use arbitration to reduce risk without sacrificing leverage over unions.
However, far from being the informal “people’s court” of earlier times, arbitration today has expanded in scope and complexity resulting in many different types and styles. Each has different implications concerning control, costs, time frame and the likelihood of success for disputants.
Although individuals in arbitration proceedings are free to represent themselves, the complex nature of collective bargaining agreements and complicated nuances of arbitration rules virtually demand that both employer and union be represented by legal counsel.
The “ouster doctrine” used to preclude pre-emptive arbitration agreements that mandate arbitration before a dispute even arises. This policy has largely been abandoned today, and many collective bargaining agreements pre-emptively impose arbitration.
Arbitration Has Its Limitations
In any arbitration setting, there may be a variety of limitations placed on the arbitrator in terms of awards. Arbitrators usually are not restricted in deliberating the merits of a case. But once they have determined an appropriate disposition, there are different paradigms which may restrict the relief for the prevailing party.
In some cases, the arbitrator is free to declare an award with no greater limitations than those of a court judge. In other cases, the disputants establish ahead of time the minimum and maximum awards to which the prevailing party may be entitled.
Still, in other cases, awards may be based on settlement offers submitted by the parties in advance. One such model, called final offer selection arbitration, requires the arbitrator to choose one of the final settlement offers proposed by each party, based on fairness and equity. This model has become fairly popular in union contracts.
In the final part of this series, we’ll discuss the unique characteristics of unions in the public sector and briefly summarize the landscape of unions outside the United States.
About the Author
Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a J.D. in Law and a Ph.D. in Hospitality/Business Management. Gary teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University and others.
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