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EFCAs Compromise Likely to Keep Its Arbitration Provision

December 29, 2009
Related Topics: HR Services and Administration, Labor Relations, Strategic Planning, Featured Article
In order to cobble together 60 Senate votes for the Employee Free Choice Act, it’s likely that legislative negotiators will have to alter a provision that would allow workers to bypass secret-ballot elections in organizing votes.

Although that card-check provision may be modified, another part of the bill that engenders passionate union support is likely to stay intact in some form—mandatory binding arbitration for a first contract.

Under the Employee Free Choice Act, an employer and a union would have to begin negotiations 10 days after a union is formed.

If an agreement isn’t reached after 90 days, the parties would have to submit their disagreements to a mediator. If no resolution is achieved after 30 days of mediation, the dispute would be subject to mandatory binding arbitration. The arbitrator’s ruling would stay in effect for two years.

Less than half of fledgling bargaining units secure a first contract in their initial year, according to Nancy Schiffer, AFL-CIO associate general counsel.

During a November event in Washington sponsored by American Rights at Work, Schiffer was asked how the arbitration language might change during negotiations. She took out a copy of the original bill, handed it to the questioner and said, “It will look like that.”

The provision is crucial because companies will otherwise be able to delay a contract to death, according to Schiffer.

“It is a positive process to help the parties reach a contract on their own,” she says.

Business groups opposing the Employee Free Choice Act say that mandatory binding arbitration is just as bad as the card check dimension of the bill—if not worse—because it would allow an outside board to determine compensation, benefits and work rules.

“That is an intrusion of federal government power into the workplace that has never been seen in American labor law,” says Steven Law, chief legal officer of the U.S. Chamber of Commerce.

Labor groups have criticized the chamber and other business groups for applying what they see as an arbitration double standard. They say that the business interests support what is called grievance arbitration, in which employer-employee disputes are settled outside the court system, but oppose mandatory binding arbitration, also known as interest arbitration, in the Employee Free Choice Act.

Law argued that grievance arbitration is embedded in employment contracts and is used narrowly to resolve disputes. Interest arbitration would potentially put the entire scope of work life in the hands of a third party.

F. Paul Bland Jr., a staff attorney for Public Justice, says that grievance arbitration is inherently unfair because employers have so much influence in choosing the arbitrators. Under the Employee Free Choice Act, unions would not be selecting the body that makes the contract determinations, according to Bland.

“It’s unfortunate that the same word is applied to two completely different situations,” Bland says.

Business criticism of arbitration for first contracts is misguided, according to Erin Johansson, a senior research associate at American Rights at Work. Recent research by the organization shows when the process has been used in Canada, wage increases have been comparable to those that have resulted from voluntary bargaining.

“The sky is not falling on capitalism in Canada,” Johansson says.

But the arbitration provision in the Employee Free Choice Act is flawed, according to a former chairman of the National Labor Relations Board.

In a May speech at the London School of Economics, William Gould IV said that Canada does not allow arbitration unless it is triggered by a mediator. The Employee Free Choice Act, however, would mandate arbitration 130 days after union certification.

“The availability of arbitration must remain uncertain if the collective bargaining process is to flourish,” Gould said.

Recent Articles by Mark Schoeff Jr.

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