The grievance procedure is intended to provide an orderly, fair dispute resolution method. But suppose management ignores a union’s arguments and evidence at each step of the procedure. What can ensure that the process is fair and respects workers’ rights? The answer is rights arbitration —also called grievance arbitration. Like interest arbitration, rights arbitration involves a hearing before a third-party neutral (the arbitrator), who issues a decision that is binding on the parties. Unlike interest arbitration, rights arbitration focuses on rights disputes—grievances. An interest arbitrator is a contract writer who establishes new terms and conditions of employment; a rights arbitrator is a contract reader who interprets the existing terms and conditions of employment.
Throughout the grievance procedure steps, the threat of a binding decision by a neutral third party gives labor and management incentives to try to settle grievances fairly and to respect due process. Nearly all contracts in both the private and public sectors include binding rights arbitration as the last step of the grievance procedure, and a few states even require it for public sector contracts. In return for management’s acceptance of binding arbitration, most unions waive the right to strike during the life of a contract by agreeing to a no strike clause.
The Legal Support for Grievance Arbitration
Some important Supreme Court rulings have cemented the viability and importance of grievance arbitration in U.S. labor relations. In 1957 the Court ruled that if a union contract contains binding arbitration as the final grievance procedure step, the employer is legally bound to adhere to this agreement and submit unresolved grievances to binding arbitration. And in 1960 the Court issued three decisions on the same day all involving the United Steelworkers of America; these decisions are collectively referred to as the Steel-workers Trilogy. The first two cases dealt with employers who refused to submit unresolved grievances to binding arbitration—even though this was in their union contracts—by claiming either that the grievance had no merit or that the subject of the particular grievance was not covered by the arbitration provision. In the first case the Court ruled that in deciding whether a grievance is subject to arbitration, the courts should not look at the merits of the arbitration case—that is the role of the arbitrator. In the second case the Court ruled that unless a subject is explicitly excluded from arbitration by a contract, it is subject to arbitration. Both these decisions support the importance of grievance arbitration by making it difficult for management to refuse to arbitrate a grievance when binding arbitration is specified in a union contract. The third case pertained to a different issue: Can an arbitrator’s decision be reviewed and overturned by the courts? The Supreme Court ruled that it is not the role of the courts to second-guess arbitrators; specifically, a judge cannot override an arbitrator’s ruling as long as it “draws its essence from the collective bargaining contract.”
Taken together, the three decisions of the Steelworkers Trilogy provide strong legal support for the grievance arbitration process and are frequently cited as being directly responsible for the centrality of grievance arbitration in U.S. labor relations. The standards established by the Trilogy cases have also been adopted in a number of states for public sector labor relations. Roughly 10,000 arbitration awards are now issued each year. Moreover, under the NLRB’s Collyer doctrine, some grievances that allege contract violations that can also be considered unfair labor practices are deferred to arbitration under the grievance procedure rather than litigated by the NLRB. But the supremacy of grievance arbitration is clouded when the grievance overlaps with Employment Law and public policies. For example, the scope for reviewing an arbitration award is significantly greater if the grievance alleges racial discrimination that violates not only a union contract but also the antidiscrimination provisions of the Civil Rights Act. Somewhat in reverse, the use of arbitration is expanding into the nonunion sector, where it is being used instead of the courts to resolve employment law claims—though this trend is controversial because of potential imbalances between employers and individual nonunion employees. Nonunion employment arbitration will be discussed later.
The Quasijudicial Nature of Grievance Arbitration
In practical rather than legal terms, as grievance arbitration was developing in the 1950s, a major debate was whether arbitration should have a problem-solving or judicial character; this debate is often referred to as the Taylor–Braden debate after the leading proponents of each perspective. If grievance arbitration is an exercise in problem solving, the arbitrator can be creative in methods (such as using mediation tactics) and solutions (such as adapting the union contract to fit current problems). If grievance arbitration is a judicial activity, the arbitrator’s sole job is to interpret; not adapt or modify—the contract just as a judge interprets the law. The latter concept won; today grievance arbitration is a formal, quasijudicial process. Note that the sample grievance procedure in Table 9.6 explicitly states, “It is understood that the arbitrator will only interpret this Agreement and will in no instance add to, delete from, or amend any part thereof.” Such contract language is common in the private and public sectors, and in the public sector it is occasionally specified by law.
An arbitration hearing is therefore like a courtroom hearing, and extensive preparation by both labor and management advocates is important. The union and the employer make opening statements; the moving party (typically the employer in discipline and discharge cases because it has the burden of proving just cause, and the union in other cases because it has the burden of proving the contract was violated) presents witnesses and evidence, and these witnesses are cross-examined; the other party presents witnesses and evidence, and these witnesses are crossexamined; and each side presents a closing statement. The traditional legal rules of evidence are not strictly applied—for example, circumstantial evidence might be allowed—but arbitrators nevertheless need to determine the credibility and persuasiveness of the evidence presented. Two to three months after the hearing, the arbitrator issues a written decision upholding or denying the grievance in whole or in part. If the grievance is upheld, a remedy is also awarded. The arbitrator’s decision is binding on all the parties.
Interpreting Ambiguous Contract Language
In making a decision, the arbitrator’s task is to interpret the contract and apply it to the situation at hand. Disputes for which the contract is clear are likely to be settled early in the grievance procedure, so arbitrators frequently confront difficult and ambiguous matters of interpretation. Suppose a contract reads, “Employees who are unable to work because of being on jury duty will be reimbursed the difference between jury duty pay and their regular earnings.” An employee who works the day shift is obviously “unable to work because of being on jury duty”; but what about an employee who works a night shift? A night shift employee might claim that she or he is “unable to work” because of physical and mental exhaustion that would result from having eight hours of jury duty and then eight hours of work in the same day. The employer might argue that “unable to work” applies strictly to direct scheduling conflicts and therefore does not apply to night shift employees. The arbitrator’s task is to interpret “unable to work” and apply it to this particular situation.
To interpret a contract, arbitrators use three elements: contractual language, intent, and past practices. In looking at contractual language, arbitrators try to use ordinary and popular meanings of words and place more weight on specific clauses than on general ones. If this fails to resolve ambiguous language, arbitrators look to intent: What meaning did the parties intend when they negotiated a clause? For example, suppose the jury duty clause used to read “unable to report to work” but was changed in the last negotiation to read “unable to work.” This might indicate an intent to broaden the jury duty clause and apply it to night shift employees. Sometimes notes from previous negotiating sessions might be used to determine intent. Lastly, past practice is important in determining how to interpret contract clauses. For the jury duty dispute, how have other night shift employees been treated? Have employees worked double shifts in the past (indicating that employees are able to work after eight hours of jury duty)? In sum, arbitrators’ decisions are based on the common law of the workplace —the written rules and unwritten customs developed in each workplace by the union contract, intent of the negotiators, and past practices.
Criticisms of Grievance Arbitration
Although grievance arbitration can incorporate accepted standards of justice into workplace dispute resolution, it has also been criticized along several dimensions. As noted in the introduction, the bureaucratic nature of traditional grievance procedures and the importance of stewards, union officials, and attorneys rather than individual workers are attacked by labor activists for stifling rank–and-file involvement in unions. Some unions are instead trying to create an organizing rather than servicing model of unionism by involving workers more in their own grievance resolution. A second criticism of grievance arbitration that comes from all parties is that it can be lengthy (perhaps a year from grievance filing to arbitrator decision) and costly.The costs of an arbitrator are split equally between the union and the employer and might amount to $1,600 each, assuming an average arbitrator rate of $800 per day for four days. Attorney’s fees are frequently more than this, so a typical arbitration hearing might cost $10,000 or more. In response, some bargaining pairs have experimented with grievance mediation, typically as a step in the grievance procedure just before arbitration. This process appears successful, and it remains a puzzle why more parties do not adopt this method.
Finally, grievance procedures in general, and arbitration in particular, are also criticized as excessively legal, formal, and reactive. (Reactive means the grievance procedure looks backward at what happened to determine whether the contract was violated.) Grievance arbitration is a quasijudicial process focused on determining the “guilt” or “innocence” of managerial actions that have already occurred; the process is not a forward-looking, problem-solving venue. As such, traditional grievance procedures are potentially inconsistent with recent efforts to involve workers in workplace decision making through high-performance work practices such as teams or quality circles. Reactive grievance processing needs to be complemented with proactive problem solving.
HR Strategy Grievance Handling and Preparing for Arbitration
Handling grievances and preparing for arbitration hearings involve largely the same tasks for both labor and management officials:
• Gathering evidence: This might include interviewing potential witnesses, collecting information from personnel files, and reviewing past practices, previous grievances, other arbitration awards that might serve as precedents, the contract, and the bargaining history of any relevant clauses.
• Collecting facts: This includes evaluating the reliability, credibility, and consistency of the evidence to determine the facts that come from the evidence.
• Constructing arguments from the facts: Rarely do “the facts speak for themselves.” Rather, they need to be carefully assembled and sequenced into a logical argument describing how the contract was violated or not.
• Preparing questions for witnesses: This includes determining the best way to present the case and also cross-examine the other side’s witnesses.
• Anticipating evidentiary issues: Will the other side challenge the credibility or admissibility of the evidence? Is the other side’s evidence credible and reliable? If not, how can this be demonstrated?
1. Which of these tasks apply to all grievances, and which are specific to arbitration hearings?
2. How can successful completion of these tasks help prevent grievances from getting to arbitration?
3. Are these tasks backward- or forward-looking? In other words, do they support the use of the grievance procedure and arbitration for problem solving or for litigating contractual disputes?