Labor Relations: Dispute Resolution

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232

IMPASSE RESOLUTION

When labor and management fail to reach agreement on a labor contract through a negotiated settlement, they may turn to a procedural technique to resolve the impasse . This chapter, which covers issues in the middle (functional) level of Figure 1.1 , describes various dispute resolution techniques, shows how these techniques affect the negotiations process, and assesses how well the techniques perform in settling impasses.

The chapter fi rst describes mediation, a process by which a third party tries to lead labor and management to a negotiated settlement through improving com- munication and making recommendations. The discussion then turns to fact fi nding, a more constraining procedure in which the third party makes their recommendations in a formal report. The next dispute procedure we consider is interest arbitration, where the parties are constrained to adhere to the decision of an arbitrator. 1

As with other aspects of collective bargaining, new techniques and roles are emerging in the area of dispute resolution. Some mediators are now using interest- based techniques to facilitate labor-management negotiations. These techniques are consistent with the principles of interested-based bargaining (described in Chapter 8 ). We will describe this approach and contrast it to the mediation of more traditional negotiations. This chapter fi nishes by discussing how new third- party roles are emerging to better respond to the environmental pressures that the parties confront and to improve labor-management relations.

MEDIATION

Mediation is the most widely used type of third-party intervention in collective bargaining. In mediation, a neutral party helps union and management negotiators reach a labor agreement. A mediator has no power to impose a settlement. Instead, he or she acts as a facilitator for the bargaining parties.

Dispute Resolution Procedures

C o p y r i g h t 2 0 1 7 . I L R P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 2/7/2022 9:19 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS AN: 1589152 ; Harry C. Katz, Thomas A. Kochan, Alexander J. S. Colvin.; An Introduction to U.S. Collective Bargaining and Labor Relations Account: s4264928.main.eds

Dispute Resolution Procedures 233

Mediators keep the parties talking, they carry messages between the parties, and they make suggestions. Mediators must rely on persuasion and their com- munication skills to convince the parties to reach a voluntary agreement. A mediator ’ s power is limited by the fact that he or she is an invited guest; either side can ask a mediator to leave.

The Federal Mediation and Conciliation Service

The National Labor Relations Act specifi es that the party proposing changes in a contract (usually the union) must notify the Federal Mediation and Concili- ation Service (FMCS) at least thirty days before the start of a strike. While the law does not require the parties to use mediation if they reach an impasse, the FMCS includes a staff of experienced mediators who are always ready to assist the negotiating parties if they are invited to do so. Most states have state mediation and conciliation agencies that also make mediators available to negotiating parties. Both federal and state mediators are typically available free of charge.

The FMCS, the U.S. secretary of labor, other members of the president ’ s cabinet, or the president is sometimes brought into the mediation process in important disputes or disputes that designated as national emergencies as defi ned by Title II of the Taft-Hartley Act. Mediation also is frequently used in hospital collective bargaining. The 1974 amendments to the NLRA, which extended the act ’ s coverage to private, nonprofi t hospitals, specify that in those hospitals, mediation has to take place before a legal strike can occur.

Mediation under the Railway Labor Act

The Railway Labor Act contains provisions for a mediation phase before a dispute can go to the next step of the impasse process. The staff mediators of the National Mediation Board, the administrative agency for the Railway Labor Act, serve as mediators in bargaining that takes place under the coverage of the Railway Labor Act.

Mediation in the Public Sector

Mediation is more commonly used in the public sector than in the private sector. Almost all of the bargaining statutes that cover state and local government employees call for mediation as the fi rst phase of the impasse resolution process. In the state of New York, for example, on average, about 30 percent of all public sector negotiations reach an impasse and required mediation. Other states have reported somewhat lower rates of reliance on mediation, but all states report rates that exceed the average the FMCS reported reports for the private sector.

In the public sector, staff mediators are employed by the various state agencies that administer the public employment bargaining statutes. In some states, mediation is the province of ad hoc, part-time mediators. These ad hoc mediators generally hold full-time posts as college professors, lawyers, or members of the clergy or in some occupation related to labor-management relations.

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234 Part III. The Functional Level of Labor Relations

Types of Disputes That Can Be Settled by Mediation

Mediation is most successful in addressing confl icts that arise from poor com- munication and misunderstandings that take place when one party or both parties become overcommitted to their bargaining positions or because of a lack of experience on the part of the negotiators. Mediation is least successful in resolving confl icts caused by the economic context of the dispute, such as the employer ’ s inability to pay or major differences in the parties’ expectations.

Where there is a wide divergence in the demands of labor and management, the mediation process is limited because some form of outside pressure is necessary to induce the parties to make major changes in their bottom-line positions. Thus, the mediation process is best suited to helping the parties move marginally beyond their initial positions. Only in conjunction with some external pressure can mediation be expected to succeed in getting the parties to adjust their bottom lines and reach agreement when a large gap exists between them.

Disputes that arise from of intraorganizational confl icts are also diffi cult to resolve through mediation. Consider again the example of the teacher dispute described in Box 8.1 , which involved major internal confl icts within a school board ’ s management. In that case, one mediation session was held before the internal split was resolved but little progress was made. After the session ended, the mediator was informed that the superintendent was going to try to get the board negotiator dismissed. For the next two months, an internal power struggle ensued. The mediator kept in touch by telephone with all the parties, but no formal mediation session took place until the superintendent emerged as the victor of the internal battle and the board negotiator was replaced. Obviously, the mediator in this case had to walk a fi ne line in trying to convince management to resolve its internal confl icts so that negotiations could proceed.

The less the mediator becomes involved in trying to mediate disputes in one of the parties’ organizations, the greater the likelihood that the mediator will be accepted by both parties and the more open the parties will be to the mediator. The diffi culty for mediators is that a failure to resolve this sort of internal dispute can make it impossible to resolve the union-management dispute.

WHAT MEDIATORS DO

The ultimate objective of a mediator is to help the bargaining parties reach a settlement. Yet there is more to mediation than the fi nal step that settles the contract. Mediation follows a continuously narrowing course as the mediator seeks to whittle away at the various issues in the dispute. Progress toward a settle- ment is sometimes possible without necessarily completely resolving any of the issues. In other words, progress has been made if the parties have succeeded in narrowing their differences over the open issues.

Mediation is also a device designed to help the parties “come clean without prejudice”—that is, to explore informally or off the record what would happen if they were to move away from their bottom-line positions. Mediators commonly undertake this exploratory effort to prevent the parties from miscalculating. Thus,

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Dispute Resolution Procedures 235

one major function of mediation is to allow informal bargaining to take place, either directly between the parties or indirectly when both parties share confi dential bargaining information with the mediator. 2

Mediators also try to prevent the parties from holding back information about which concessions they are willing to make to avoid a strike in tripartite meetings. It is by no means an easy task for a mediator to identify where the point of resistance is for the parties, since in most instances negotiators are extremely wary about sharing this information openly with a mediator. Instead, mediators must guess at the parties’ positions from the statements they make and then try to get the parties to put their best offer on the table.

What mediators do is infl uenced by whether the parties use traditional or interest-based strategies in negotiations. When negotiators use interest-based techniques, they expect mediators to be skilled facilitators of this type of process. Mediators must be good at generating options through brainstorming and at knowing when to suggest that negotiators form subcommittee or use some other device for gathering additional information. They must also be able to offer suggestions that are more than simple compromises of existing positions—mediators must help invent new options that satisfy the interests of both parties. Most of all, mediators need to watch for statements or actions by one party or the other that might indicate that the process is reverting to traditional positional bargaining and coach the parties about how to avoid this tendency. Finally, mediators must also be skilled teachers of these new approaches to negotiations and must have a keen sense of when to recommend that parties try interest-based techniques. This must be done well before the start of a negotiations process since, as we indicated in Chapter 8 , most negotiators need to be trained in these techniques before they can use them successfully in actual bargaining.

The Traits of Successful Mediators

What are the traits of a good mediator? Perhaps the most critical requirement is that the mediator be viewed as trustworthy by the parties. Because this type of intervention is voluntary, no mediator can function well without the trust of the parties.

Trustworthiness is also important because the mediator must obtain confi dential bargaining information from the parties. If this information is used indiscriminately, it could destroy a party ’ s bargaining strategy. Although trust can be achieved by reputation, most experienced negotiators will be hesitant to divulge confi dential bargaining information merely because the mediator has a good reputation. Thus, the early stages of most mediation efforts (when the mediator is not personally known to the parties) is often taken up with the mediator ’ s attempts to establish his or her trustworthiness

Trust can be lost as the process unfolds. When this occurs, a mediator may voluntarily withdraw from the case or the parties may seek other way of resolving the dispute.

The litany of desirable mediator traits often reads like a modifi ed Boy or Girl Scout oath: A good mediator is trustworthy, helpful, friendly, intelligent, funny,

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236 Part III. The Functional Level of Labor Relations

and knowledgeable about the substantive issues in question. Evidence suggests that nothing substitutes for experience as a quality that helps a mediator gain the trust of negotiators and in other ways promotes successful mediation. Mediation is an art that one must learn by trial and error through on-the-job training.

THE DYNAMICS OF MEDIATION IN TRADITIONAL BARGAINING

Mediation and the strategies of a mediator in a traditional bargaining process often proceed through a cycle of different stages. 3

The Initial Stage: Gaining Trust

During the initial stages of mediation, the mediator is primarily concerned with gaining the trust of the parties and identifying the issues in the dispute, the emotional climate between the parties, and the distribution of power on each negotiating team. During the initial stages of mediation, the role of the mediator is to ask questions and listen. Normally the mediator will shuttle between the two negotiating teams to explore issues. Separate sessions with the mediator also give the parties an outlet for their pent-up emotions and frustrations.

In these stages the parties will often lash out at each other, exaggerate their differences, and try to convince the mediator of their own rationality and the unreasonableness of their opponent. It is in these early sessions that bonds of trust and credibility can be established between the mediator and the parties.

In short, in the early stage of mediation the parties are testing the mediator. Some of the same grandstanding that occurs in the early stages of the negotiating cycle is repeated at this point in mediation for the benefi t of the newest entrant into the process.

The biggest challenges for the mediator at this stage are (1) to accurately diagnose the nature of the dispute and the obstacles to a settlement; and (2) to get something started that will produce movement toward a fi nal resolution. The mediator often hears from one party that “we made the last move, so the next move is up to them,” only to proceed to the other side and hear the same thing. The mediator cannot let either party ’ s hesitance to move fi rst halt the process before it is given a chance. Neither party, in all likelihood, wants this to happen, or the mediator would not have been called in the fi rst place.

The Middle Stage: Probing for Potential Compromises

Once the mediator overcomes this stalemate, the next step is to begin an exchange of proposals and test for potential areas of compromise. At this point, it is crucial that the mediator ’ s diagnosis of the underlying sources of confl ict is accurate. The mediator is now beginning to intervene more actively by trying to establish a framework for moving toward a settlement. If the mediator has misjudged the underlying diffi culties and tries to push the parties toward a settlement prematurely or in a way that does not overcome some of the major obstacles, his or her credibility can be lost.

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Dispute Resolution Procedures 237

During this second stage of the mediation process, the mediator continues to ask questions to identify the priorities and bottom-line positions of the two parties. The mediator actively probes for possible acceptable solutions to the outstanding issues. Once the parties have begun to discuss specifi c proposals, the mediator attempts to determine whether their bottom-line positions are close enough. If they are, then the mediator presses for modifi cations that would yield an agreement.

The mediator ’ s ability to estimate the parties’ bottom-line positions is crucial at this stage, as is the timing. When the mediator judges the bottom-line positions to be close enough to push toward a settlement, he or she takes a more assertive role. The mediator can suggest compromises, push the parties to make compromises that they earlier stated they would be unwilling to make, and, in general, try to close the gap between the parties. Engaging in such active tactics prematurely (that is, when the parties are still too far apart) will damage the mediator ’ s credibility and acceptability.

When conditions are not right for settlement, the mediator must hold back from overly aggressive tactics. When the situation is ripe, however, the mediator must take action or risk losing the opportunity to forge a settlement. The mediator ’ s prior experience helps guide him or her in judging timing. At this point in the process, the art element of mediation comes to the fore.

The Final Stage: The Push to Compromise

As the pressure to reach a settlement builds and the mediator senses that the time for the fi nal push toward resolution is at hand, the mediator becomes more aggressive. No longer passively listening to the parties’ arguments and rationaliza- tions, the mediator tries to get the parties to face reality and adjust their expectations. The mediator may push compromise solutions while at the same time being careful to avoid becoming identifi ed with a specifi c settlement point.

Overidentifi cation with a solution that one or both party rejects can limit the continued usefulness of the mediator. Thus, any compromises the mediator proposes must be presented as merely recommendations.

The dynamics in each of the negotiating teams often change at this point as well. Frequently, team members will differ on the substantive issues. The mediator will often look to the professional negotiators on each team for help in dealing with the more militant team members. Sometimes the reverse is true: the negotiator will look to the mediator for help in calming a militant faction on the bargaining team.

These fi nal-hour sessions often require that someone—the mediator, the profes- sional negotiator, or both—convince the hard-liners that the best deal is at hand and that the fi nal compromises necessary to reach a settlement should now be made. Again, the parties’ confi dence in the mediator is critical to the success of these fi nal dynamics.

Sometimes the mediator is called on in these fi nal stages to make what are called mediator proposals. Mediator proposals are riskier and more formal ventures than the many other suggestions a mediator makes during the course of an

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238 Part III. The Functional Level of Labor Relations

intervention. A mediator proposal is normally made only when both parties are close to a settlement and the mediator believes that by making the proposal the parties will come to agreement.

In some cases, the mediator may make a proposal that the parties have already tacitly agreed to but for political or other reasons prefer not to offer themselves. Some mediators believe that a proposal should never be made unless the mediator is sure it will be acceptable to both parties.

The preceding description of the dynamics of mediation points out that mediators must be aggressive in pushing the parties toward a settlement—when the climate, the timing, and the pressures on the parties are right. The parties often prefer aggressive mediators, and the aggressiveness of a mediator has been shown to be related to the effectiveness of the mediation process. 4

Mediation in Interest-Based Bargaining

We have already noted that the role of the mediator in interest-based processes takes on more of the role of an active facilitator, teacher, and coach than is the case in a traditional bargaining process. The cycle of negotiations is likely to be different as well, with less focus on the contract or the strike deadline as the defi ning moment. Since it is necessary to train negotiators in this method, the mediation process may begin well before the negotiations process starts. The FMCS offers training in interest-based bargaining to parties as part of what it refers to as “preventive mediation.”

In Box 9.1 , George Buckingham, one of the most experienced and successful interest-based mediators in the FMCS, describes how and when he uses interest- based techniques to facilitate the bargaining process.

BOX 9.1 How Interest-Based Mediation Works

Well before negotiations are scheduled to begin, I provide parties who express an interest or who we believe might be good candidates for an interest-based approach with a one-and-a-half-hour informational briefi ng. We discuss factors to think about in deciding whether or not to use this approach. In the process of this discussion, I probe to see if there are any factors that would lead me to recommend against using the process, such as no evidence of cooperation in the relationship or a history of contract rejections by one side or the other.

If the parties agree to take the next step, we then hold a two-day required training session for all members of the union and employer negotiating committees. At the end of the training, we make a trilateral (union, employer, and mediator) decision on whether or not to go forward with the process.

The next step is to hold a prenegotiations meeting to agree on two sets of ground rules. The fi rst set are transitional ground rules that outline what

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will happen if at some stage the interest-based process breaks down and the parties need to return to a more traditional process. This serves as a “road map” back to the traditional process and provides a safety valve for the parties. The second set are process ground rules. Here we deal with rules such as how we defi ne consensus decision making, how we will deal with press releases, how and when information will be communicated to con- stituents, and so on.

Then we are ready for an exchange of issues using an interest-based format. This exchange takes the place of a traditional exchange of proposals, or the laundry list of demands. Each issue is framed as a question that cannot be answered in a yes or no fashion. For example, an issue might be framed as: “How can we accommodate employee needs to have greater time off for funerals and handle staffi ng needs effectively?” We also agree at this stage on the order we will take up issues and on any information that needs to be obtained in order to discuss them. Bargaining dates are set at this time, after giving adequate consideration to the time needed to collect the necessary data.

For the actual bargaining, we commit to participating in the fi rst two sessions or until the fi rst issue is settled, to returning when the economic issues are taken up, and to being present as the process is coming to an end.

What do I do in these sessions? My basic role is to facilitate the process, to keep the process on a problem-solving track, and to make sure they lay out all the issues and problems and don ’ t stray into a general discussion mode that will take them back to traditional positional bargaining. If, in the rare instance, I feel the need to make a substantive suggestion, I indicate that I am stepping out of my facilitating role to do so.

One of the hardest tasks the parties have is to agree on standards for evaluating options. I suggest three simple standards, but the parties are encouraged to develop their own as well. The three I use are: (1) Can we do it? (2) Does it convey benefi ts (related to their interests)? (3) Is it acceptable to the constituents?

The parties take up noneconomic issues fi rst. Then, in perhaps about 35 to 40 percent of the cases, I fi nd us using more traditional approaches to resolve the deep-gut economic issues. But even here, when the interest-based process has been successful on the earlier issues, we generally fi nd more of a problem-solving focus and willingness to listen to each other that is often absent in the fi nal stages of a traditional negotiation. The parties are more apt to stay in an interest-based bargaining frame of mind.

Two big differences in my experience with this approach are that the contract deadline and the strike threat are not major factors. In only three out of 60 cases I ’ ve mediated in this way has a strike notice been issued, and then it was done to satisfy constituency needs rather than as a serious threat across the table. The overwhelming majority of cases have settled prior to the contract expiration date, while some have gone beyond the

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240 Part III. The Functional Level of Labor Relations

When is this approach likely to be most successful? FMCS commissioner Buckingham suggests that it is most likely to succeed in one of two situations: (1) when the parties already have other elements of a cooperative relationship in place and want to take the next step by carrying problem solving into the bargaining process; or (2) when there will be serious adverse consequences if the parties don ’ t solve a set of problems they face. In either case, the key is to have some strong motivating factor that helps keep the process on course when the going gets tough.

THE POTENTIAL TENSION BETWEEN WHAT IS RIGHT AND WHAT WILL BRING A SETTLEMENT

In theory, a mediator is not supposed to be concerned with the substance of the outcome. Instead, the traditional view is that mediation works because the job of the mediator is simply to bring the parties to agreement. Yet there are times when mediators have trouble accepting this principle. Consider, for example, the mediator in the case described in Box 9.2 . Here, the mediator could not let his personal views of management ’ s negotiating style get in the way of a settlement.

All mediators must struggle from time to time with the moral question of how far to compromise their personal values or perceptions of equity in attempting to fashion a contract settlement. The traditional answer to this question has been that the mediator ’ s primary responsibility is to help the parties reach an agreement and to keep his or her values and preferences, or the values and preferences of the larger society, out of the process. According to this view, the mediator should not attempt to create a settlement that would be most consistent with the public interest. The traditional view is that the way the mediator can best represent the public interest is by helping prevent or ending an impasse. 5

The moral dilemma is even more diffi cult to resolve if questions of individual rights are part of the settlement package one of the parties prefers. Mediators will continue to struggle with this moral dilemma and decide how high a priority they are willing to put on the singular goal of achieving a settlement. 6

expiration with no serious repercussions. In only one occasion did I hold a mediation session beyond 8 p.m.

I like to use two criteria to judge whether the interest-based approach has been successful. The fi rst is whether the parties use it again the next time. About 80 percent do so. The second is whether the number of relation- ship or noneconomic issues brought to negotiations decrease the second time around. If interest-based bargaining is able to really solve problems, the number of “relationship” or noneconomic” issues should go down.

Source : Interview with FMCS commissioner George Buckingham, July 1997.

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Dispute Resolution Procedures 241

BOX 9.2 Report of a Frustrated Mediator

This dispute was resolved after one long night of mediation. The parties had been negotiating for over a year. A fact-fi nding report had been issued, and considerable progress had been made on economic issues. The major remaining unresolved issue was whether these employees [janitors, bus drivers, and cafeteria workers in a school district] would have binding grievance arbitration in their contract. . . . It was clear that the [school] board was adamantly opposed to binding arbitration. . . . The [mediation] process was made more frustrating by the condescending attitude that the district administrators took toward the members of the bargaining unit. Unfortunately, my role at this fi nal step of the process was simply to get the union negotiators to face the reality that there was no way they could get an agreement containing binding arbitration. . . .

If I had let my own feelings toward the board negotiating team surface during mediation, the process would have not only broken down but it would have been even harder for the parties to put this long and frustrating case behind them. Consequently, one walks away from this type of dispute with a lot of pent-up anger and frustration.

Some mediators, especially those who favor the use of interest-based techniques, reject the traditional view. Instead, they argue that an effective mediator will help the parties articulate their basic interests and then help steer the process to results that best serve their interests. In this view, the substantive terms of the settlement are as important to the success of mediation as a settlement is.

FACT FINDING

When fact fi nding takes place, a third party (a fact fi nder) is called in to study the issues that are in dispute between labor and management negotiators who have reached an impasse in their negotiations. After gathering facts, the fact fi nder then makes a report or an announcement that may be made public. The fact fi nder ’ s report often includes recommendations about what the fact fi nder believes is an appropriate settlement of the impasse. Fact-fi nding is premised on the hope that the recommendations and a neutral report will bring suffi cient pressure to bear on the parties to induce them to accept the recommendations of the fact fi nder or to use them as the basis for a negotiated settlement.

Fact fi nding is rarely used in the private sector (like mediation, the NLRA does not require it), but it is commonly used in the public sector. 7 Fact fi nding also has been frequently used in negotiations that are covered under the Railway Labor Act (the Railroad Mediation Board can call for it). The national emergency

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242 Part III. The Functional Level of Labor Relations

dispute procedures of the NLRA also authorize fact fi nding as part of the process by which the president can call into action an emergency impasse resolution board.

A Case of Fact Finding

The following describes the use of fact fi nding in a dispute between a teachers’ union and a school district.

A neutral [person] fi rst attempted to mediate the dispute but was discouraged by the professional negotiators for each side. They explained that they knew what their differences were and that if it was up to them alone they could settle the dispute without the help of a neutral party. The problems were that the school board was unwilling to accept what both negotiators agreed was a reasonable salary settlement and one faction in the union was unwilling to compromise on a contract-language issue. The mediator therefore agreed to proceed directly to fact fi nding. In the course of the hearing, the two negotiators presented their cases in ways that made it clear to the fact fi nder what they would agree to and thus what they wanted the fact fi nder to recommend. The fact fi nder ’ s recommendations closely followed these tacit admissions. Both negotiators used the “neutral ’ s recommendations” in selling the tacit agreement to their constituents.

INTEREST ARBITRATION

Interest arbitration involves the use of a third party (an arbitrator) who is empowered to impose a settlement in a contract dispute. In interest arbitration, the arbitrator sets the terms of the contract. Thus, interest arbitration is different from grievance (or rights) arbitration, in which an arbitrator is used to settle a dispute during the term or about the implementation of an existing contract (see Chapter 12 ).

Interest arbitration is not used very often in the private sector in the United States. The few exceptions in the private sector have been major league baseball (see Box 9.3 ), national emergency disputes under the Taft-Hartley or Railway Labor Acts or cases where the parties voluntarily submitted their disputes to arbitration. Interest arbitration has been used more frequently to settle impasses in public sector bargaining.

The NLRA gives labor and management the right to strike over impasses and this leads to limited use of interest arbitration. Many proponents of collective bargaining in the private sector have long argued that the right to strike (and thus the absence of interest arbitration) was essential for the preservation of free collective bargaining .

As one scholar put it over 35 years ago:

In the case against compulsory arbitration there are distinguished prosecutors galore, and the catalog of inevitable disasters runs the gamut from simple bad decisions to dislocation of the economic foundations of free enterprise. The division is not liberal/ conservative, nor labor/management—there is no division. All the principal authorities are in agreement. 8

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Dispute Resolution Procedures 243

BOX 9.3 Major League Baseball Salary Arbitration Procedure

Eligibility

Any Player or Club may submit to salary arbitration with the consent of the other party. However, a player [with] between three and six years of Major League service may submit to salary arbitration without the consent of the other party.

Selection of Arbitrator

The Players Association and the Player Relations Committee shall annually select the arbitrators.

Procedure

Within three days of salary arbitration submission, the Players Association and the Players Relations Committee exchange salary fi gures. The Player has the option of withdrawing within 7 days of the receipt of the Club ’ s salary fi gure. And in the event the Club or Player reach a salary agreement before the arbitrator reaches his decision, the matter shall be withdrawn from arbitration.

Timetable and Decision

The Player and the Club submit the salary fi gures to the arbitrator at the hearing. The arbitration hearing is held as soon as possible after submission and scheduled between February 1 and February 20. The arbitrator may render his decision on the day of the hearing, and shall make every effort to decide no later than 24 hours following the close of the hearing. Finally, the arbitrator is limited to awarding only one or the other of the two fi gures submitted.

Conduct of Hearings

Each party is limited to one hour for initial presentation and a half-hour for rebuttal and submission. There are no continuances or adjournments.

Criteria

The criteria used in determining the Player ’ s worth include the quality of the Player ’ s contribution to his Club during the past season (including his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player ’ s past compensation, comparative baseball salaries, the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club. In addition, any evidence relevant to these criteria may be submitted as evidence.

Source : Basic Agreement between the American and National League of Professional Baseball Clubs and the Major League Baseball Players Association, January 1, 1986.

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244 Part III. The Functional Level of Labor Relations

In this view, interest arbitration should be limited to cases of dire national emergency or to disputes in which the parties themselves decide it is in their interest to submit their dispute to a procedural substitute for a strike.

The Use of Interest Arbitration in the Public Sector

As the demand for public sector bargaining became more vocal in the late 1960s and early 1970s policy makers had to make a diffi cult choice: unions were calling for collective bargaining rights, while elected offi cials were reluctant to grant public employees the right to strike. Because both unions and management had little experience with interest arbitration and doubted its effectiveness, most states initially turned to fact fi nding as a compromise between the right to strike and interest arbitration. By the late 1970s, about half the states that had endorsed collective bargaining for public employees turned to some form of arbitration for resolving disputes between city governments and their police and fi refi ghters.

Since interest arbitration has been used primarily in the public sector, the public sector record reveals how well it works. This record is discussed below along with occasional references to experience with arbitration in the private sector.

Types of Interest Arbitration

There are many different forms of interest arbitration. One key difference is whether the procedure is voluntary or compulsory. Voluntary arbitration is a dispute resolution system in which the parties agree to submit their differences to arbitration. Compulsory arbitration is a system in which law requires the parties to submit their unresolved differences to arbitration if they cannot reach a negotiated settlement on their own.

Another important distinction is the difference between conventional arbitration and fi nal-offer arbitration. Conventional arbitration (which can be either voluntary or compulsory) is a dispute resolution process in which the arbitrator is free to fashion any award he or she deems appropriate. Although the conventional arbitration award may be a compromise between the proposals of the employer and those of the union, the arbitrator is also free to accept either party ’ s proposals or, for that matter, to go below the employer ’ s offer or above the union ’ s offer (although that rarely happens).

Terminology Used in Final-Offer Interest Arbitration

In fi nal-offer arbitration , the arbitrator must choose either the employer ’ s proposal or the union ’ s; the arbitrator may not fashion his or her own compromise. As a further distinction, fi nal-offer arbitration may be handled on a total package basis—that is, the arbitrator must choose the complete offer of the employer or the complete offer of the union on all issues. Final-offer arbitration can also be handled on an issue-by-issue basis. The arbitrator, for example, might choose the employer ’ s wage offer, the union ’ s offer on health insurance, and the employer ’ s offer on vacation days. 9

There is yet another complication. The arbitrator can be an individual or a panel of individuals. Panels can either be composed of all neutrals or they can be

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Dispute Resolution Procedures 245

tripartite. Tripartite panels are composed of one or more representatives of the employer, one or more representatives of the union, and one or more neutrals.

Debates over the Performance and Effects of Interest Arbitration

What does the use of interest arbitration do to the parties’ ability to negotiate on their own? What kinds of settlements do arbitrators impose and how do the arbitrators’ settlements compare with the settlements labor and management reach on their own? Does interest arbitration prevent strikes? These questions are part of the controversy that surrounds the use of interest arbitration. The evidence on these issues is only summarized here because public sector experience with interest arbitration is examined in detail in Chapter 13 .

Interest arbitration in the public sector has had a better record of preventing strikes than fact fi nding or bargaining without any impasse procedure has. Although no dispute resolution procedure, including interest arbitration, can prevent all strikes, interest arbitration appears to reduce the probability of strikes more than fact fi nding does.

To date there is little evidence that interest arbitration has been overused where it is available. The vast majority of disputes tend to be settled without resort to interest arbitration. Even in states where that have used interest arbitration for thirty years, the rate of cases going to interest arbitration rarely exceeds 25 percent. 10

The evidence of the effect of arbitration on contract terms is that arbitrators tend to impose settlements that are not very different from the settlements that parties who bargain reach where arbitration is not available as an impasse resolution procedure. The use of interest arbitration across a state to settle public sector disputes does appear to narrow the range of settlements by eliminating extremely high and extremely low settlements. The effect of interest arbitration on contract terms such as wage levels appears to be modest. Where an effect has been measured, arbitration tends to lead to wage levels that are 5–10 percent higher than wages in jurisdictions where arbitration is not available.

Voluntary Interest Arbitration in the Private Sector

Voluntary interest arbitration schemes have been used in the private sector in electrical construction, large construction projects (such as the Cape Canaveral space center and the Alaska pipeline project), and newspapers.

The only signifi cant private sector use of interest arbitration now occurs in major league baseball. As noted earlier, major league players and baseball club owners have negotiated a master collective bargaining agreement for thirty years. That master contract stipulates that the salaries of individual players are determined through negotiations between each player and his respective club owner.

As Box 9.3 shows, the master agreement requires that a player ’ s salary be set by an arbitrator if an impasse is reached between the player and the club owner in salary negotiations. The arbitrator is restricted to choosing the fi nal offer of the player or the fi nal offer of the owner. The terms and conditions of employment for baseball players other than salary are not subject to interest arbitration. Club

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246 Part III. The Functional Level of Labor Relations

owners became very dissatisfi ed with the use of arbitration in the 1990s and tried to eliminate it in negotiations and during the strike of 1994, but they were not successful on this point. Instead, the parties modifi ed the procedure by agreeing to phase in the use of three neutral arbitrators per case rather than a single arbitrator.

Voluntary interest arbitration has also been used on an ad hoc basis as a confl ict resolution device of last resort. From time to time diffi cult strikes, such as disputes between the United States Postal Service and postal worker unions, have been resolved with an agreement to arbitrate (see Chapter 8 ).

BOX 9.4 Interest Arbitration in the California Agriculture Industry

As one of the most essential industries in California, the agriculture industry had been under intense pressure to fi nd a solution to a subpar collective bargaining system. Because of this, in 2002, the California legislature passed a law that created mandatory interest arbitration for cases where employers and unions in the agricultural industry were unable to come to a consensus while bargaining for an initial collective bargaining agreement. The law was quickly subject to legal challenge, although the courts ultimately denied the challenge.

Hess Collection Winery, an agricultural employer in the Napa Valley, fi led an appeal claiming that the legislature had no authority to pass a law mandating interest arbitration. In fact, it went as far as to say that mandating interest arbitration only in the agricultural sector of the state ’ s economy seriously violated equal protection guarantees in the state constitution. As a result of this appeal, the law was brought to the California Court of Appeals.

On July 5, 2006, because of the need to effi ciently reach an agreement in collective bargaining contracts in the industry and because the statute only applies to the initial bargaining offer, the California Court of Appeals upheld the previous decision and deemed mandatory interest arbitration lawful because the court believed it to be constitutionally accurate. Justice Richard Sims of the appeals court stated that the law “bears a rational and conceivable relationship to a legitimate state purpose,” and as such, it passes the constitutionality test and should therefore be allowed. Sims went on to say that “agricultural employees are in an especially unequal bargaining position with respect to their employers and that their health, safety, and welfare require special protection.” Therefore, Judge Sims concluded that extra security must be awarded to them and the law mandating interest arbitration would help “protect the industry by promoting stability in agricultural employment.”

Source : “California Court Upholds Constitutionality of State ’ s Mandatory Interest Arbitration Law,” Daily Labor Report , July 7, 2006, AA-1.

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Dispute Resolution Procedures 247

In voluntary interest arbitration schemes, the parties normally limit the discretion of the arbitrator. In baseball, the arbitrator rules only on player salary (although other parts of the master baseball contract are subject to grievance arbitration).

The key to the negotiation of voluntary interest arbitration plans is that both parties must perceive benefi ts in agreeing to set aside the right to strike. Labor and management generally voluntarily accept interest arbitration only when strike costs are high.

The Structure and Process of Interest Arbitration

A wide array of choices is available for designing the structure of interest arbitration systems. These structural options determine the nature of the decision-making process in interest arbitration in important ways. In fact, the structure the parties choose is a refl ection of their fundamental views on the appropriate functions of an interest arbitration system. This section describes two types of decision-making processes in interest arbitration and suggests how these are infl uenced by the structural design of the system.

A Combined Mediation-Arbitration Approach

The two decision-making processes available are (1) a mediation-arbitration process; and (2) a judicial decision-making process. Advocates of the mediation-arbitration process view interest arbitration as an extension of the collective bargaining process in which the neutral arbitrator seeks to shape an award that is acceptable to the parties. Mediation-arbitration places a premium on using the interest arbitration proceeding as a forum for continued negotiations or mediation, albeit with the arbitrator holding the ultimate authority to decide on the contract.

Those who advocate the mediation-arbitration approach claim that no system of interest arbitration can hope to survive for long unless it produces outcomes that are acceptable to the parties.

A Judicial Approach

The countervailing view of interest arbitration holds that the arbitrator should focus on the “facts” of the case. In this judicial approach, the arbitrator adheres strictly to predetermined criteria and is not infl uenced by the bargaining power or preferences of the parties.

NONTRADITIONAL DISPUTE RESOLUTION

The need for skilled third parties in confl ict resolution and problem solving is not limited to the formal negotiations process. Indeed, in recent years a variety of new dispute resolution roles have emerged in settings where labor and management have been attempting to achieve fundamental changes in their bargain- ing relationships.

For example, neutrals, for example, are increasingly being called on to chair or facilitate labor-management committees, to serve as consultants to labor and

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248 Part III. The Functional Level of Labor Relations

management in quality-of-working-life programs, to facilitate the joint planning or joint design of a new plant or work system, or to work on other experimental projects designed to solve long-standing problems in a bargaining relationship. All of these roles require the skills of a labor mediator. In addition, these roles differ from traditional mediation or arbitration roles in several important ways.

First, most require that problems be addressed on an ongoing basis. 11 Often this requires that the parties fi rst undergo a team-building effort to change their attitudes and to increase the level of trust they have in each other.

Second, these third parties must have specialized knowledge of the substantive problems the parties face. The third party is expected to be a consultant who brings technical expertise to discussions of the problem and is sensitive to the needs of both labor and management.

Third, the time horizon of the process tends to be very long. Whereas the traditional mediator is mainly concerned with achieving a settlement of the immediate impasse, third parties involved in these new roles must focus on the effects of any decision on the quality of the longer-term relationship.

The behavior of the parties to these new processes is also signifi cantly different from traditional labor-management behavior. For example, to be successful, long-term problem solving requires the parties to share information more readily than they do in traditional collective bargaining.

In response to this growing demand, the FMCS has increased its emphasis on what it calls “preventive mediation”; that is, programs designed to train the parties in state-of-the-art labor-management practices or to facilitate more directly efforts to improve relations in particular industries or particular companies and unions.

At the same time, however, the parties may still need to turn to the traditional mediation and arbitration processes. In short, both effective confl ict resolution and longer-term problem solving are critical to the success of contemporary collective bargaining relationships.

KEY ORGANIZATIONS AND AGENCIES INVOLVED IN IMPASSE RESOLUTION

The key organizations and agencies that are involved in the resolution of impasses are summarized below.

American Arbitration Association (AAA): A private nonprofi t organization that facilitates the process of arbitration. The AAA maintains lists of arbitrators and makes facilities available that can be used for arbitration hearings. The AAA offers seminars to train young arbitrators and to keep experienced arbitrators informed about emerging developments. Much of the arbitration work AAA perform arbitrators is grievance arbitration, but AAA arbitrators also become involved in interest arbitration.

Federal Mediation and Conciliation Service (FMCS): An agency of the federal government mandated by the National Labor Relations Act. The NLRA requires labor and management to notify the FMCS at least thirty days before a strike. The FMCS includes a staff of 250 mediators who offer their services to labor and management involved in impasses.

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Dispute Resolution Procedures 249

National Academy of Arbitrators (NAA): A professional society of experienced arbitrators. Most of the cases NAA arbitrators hear are grievance arbitrations, although NAA members are also involved in interest arbitration.

National Mediation Board (NMB): An administrative agency created by the Railway Labor Act. One of the functions of the board is to mediate disputes between labor and management that arise in the transportation industries covered by the Railway Labor Act.

State mediation and conciliation agencies: A variety of agencies exist at the state level to facilitate the mediation of labor impasses. In states that grant public employees bargaining rights, a separate agency concerned with public sector bargaining impasses frequently exists. In New York, for example, the Public Employment Relations Board (PERB) provides mediation assistance among its many functions.

Summary

This chapter described the three major impasse resolution procedures—mediation, fact fi nding, and interest arbitration. The use of these procedures has varied extensively. Mediation has been commonly used in both the private and public sectors. Fact fi nding and interest arbitration, in contrast, have been used in the public sector with only a few exceptions.

The procedures also vary in the degree to which they constrain the actions of labor and management. At one extreme is mediation, where the parties can, and sometimes do, dismiss the mediator or ignore the advice given. At the other extreme is binding interest arbitration, where the parties must follow the decision of the arbitrator.

The purpose of any impasse resolution procedure is to help the parties achieve a contract settlement that both labor and management fi nd acceptable and that helps sustain a successful labor-management relationship. Good mediators, fact fi nders, and arbitrators understand the issues that divide labor and management and have the ability to offer creative solutions to these problems.

Discussion Questions

1. Describe the objectives of mediation. 2. What are the three stages that typically occur in a mediation? 3. Discuss some of the criticisms of interest arbitration. 4. Contrast mediation-arbitration and judicial arbitration.

Related Web Sites

Federal Mediation and Conciliation Service (FMCS): http://www.fmcs.gov

National Mediation Board (NMB): http://www.usa.gov/federal-agencies/national-mediation-board

Alternative Dispute Resolution Forum: https://www.adrforum.com/

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http://www.fmcs.gov

http://www.usa.gov/federal-agencies/national-mediation-board

https://www.adrforum.com/

250 Part III. The Functional Level of Labor Relations