Union Contract Clauses and Their Administration

By Budd, J.W.

Edited by Paul Ducham

UNION CONTRACTS

As workers fought for workplace justice in the early decades of the 1900s, they frequently tried to force their employers to follow impartial rules: wages that were based on jobs rather than unfair manipulation of piece rates; promotions and layoffs based on seniority rather than managerial favoritism and discrimination. This was a way of “introducing civil rights into industry—that is, of requiring that management be conducted by rule rather than by arbitrary decision.” An alternative quest for workplace justice focused on shop floor militancy and union control of work standards backed up by spontaneous strikes and slowdowns. Many union and corporate leaders preferred the rules-based approach, which supported management’s desire for stability and discipline and also fulfilled union leaders’ needs for countering managerial authority without having to resort to wildcat strikes that could undermine their own leadership positions.Thus by 1930 the Amalgamated Clothing Workers union had negotiated numerous contracts in the garment industry that replaced the militancy of small work groups with the discipline of “responsible” union leaders. Both workers and managers had to follow the negotiated work rules, performance standards, and disciplinary procedures that were enforced through a Grievance Procedure culminating with the rulings of impartial arbitrators. In 1940, General Motors agreed to a contract with the United Auto Workers that provided for an impartial umpire to settle disagreements over seniority rights, discipline, and other contractual standards that were not resolved through the first steps of the grievance procedure.

Governmental pressures for industrial peace to promote war production during World War II further spread the use of grievance procedures and umpires/arbitrators while driving out wildcat strikes over grievances.The strikes that followed the end of World War II, especially the UAW’s strike against General Motors, established that unions would negotiate for higher wages, better benefits, and favorable seniority provisions and work rules, but would not be involved in business decisions. Section 301 of the Taft– Hartley amendments to the national labor relations act (NLRA) in 1947 made these collective bargaining agreements enforceable in federal court. Lastly, the Supreme Court confirmed that this enforceability applied to agreements to submit unresolved grievances to Binding arbitration. The postwar model of workplace self-government—complete with the law of the workplace (the contract and previous arbitration rulings), defense attorneys (union stewards), and court of appeals (the grievance procedure)—was thus cemented. Note carefully that U.S. Labor Relations are therefore rooted in contract clauses and their administration through grievance procedures—an administration that is legalistic and orderly (not based on strike power) and private (relying on arbitrators, not court judges).

Today’s union contracts, therefore, are legally enforceable documents that specify the laws of the workplace, often in great detail. UAW contracts with the major automakers are hundreds of pages long, contracts with the U.S. Postal Service exceed 300 pages, the collective bargaining agreement between the National Football League and the players’ union is over 250 pages long, and the University of Minnesota clerical employees’ contract approaches 150 pages. Many shorter contracts are between 25 and 50 pages long. Most contracts have a duration of three years.Some include a reopener clause by which the parties can reopen the contract during its life to negotiate wage or benefit adjustments, but most are renegotiated upon expiration. The following five sections discuss the types of clauses that are frequently found in U.S. contracts—clauses that give rights to employees, jobs, unions, and managers and that govern the resolution of conflicts that arise (see Table 9.1 ).

Table 9.1

EMPLOYEE RIGHTS

Four types of employee rights are frequently granted in union contracts: just cause discipline and discharge, seniority rights, compensation, and grievance procedures. In return for these various rights, employees are obligated to follow the employer’s work rules and supervisor’s directions and to abide by the provisions of the contract (such as not striking over grievances). Over 90 percent of private sector union contracts specify that employees can be disciplined and discharged only for “cause” or “just cause.” Public sector contracts frequently contain this same language. As such, employees have the right to insist that there be valid, job-related reasons for discipline or dismissal. This is of obvious importance for both employees and employers; it is also a significant departure from the employment-at-will doctrine and will therefore be discussed in more detail. A second category of employee rights pertains to seniority. A traditional union objective is to replace arbitrary or discriminatory treatment of workers with an objective standard to prevent favoritism, manipulation, and abuse. But how many truly objective standards exist in the employment relationship? Merit and ability, in particular, are often largely subjective. Seniority—length of employment with the employer—is objective (count the number of days since being hired) and also resonates with basic ideas of fairness. Seniority is therefore widely used in union contracts as a criterion for allocating employment opportunities. Seniority is at least partly a factor (sometimes the only factor) in nearly 90 percent of private sector contracts and can also be found in a variety of public sector contracts. Layoffs are therefore frequently done by inverse seniority—workers with lower seniority are laid off before those with more (“last hired, first fired”). Bumping rights further grant more senior employees the right to bump less senior workers out of their positions during layoffs. Seniority is also a factor in promotions (two-thirds of private sector contracts) and transfers (more than half of private sector contracts) with more senior employees having priority (at least partial) over less senior ones. More senior employees usually receive more vacation days and in some cases get the first opportunities at overtime (though most contracts specify that overtime should be allocated equally).

In allocating employment opportunities, seniority is typically a sole, determining, or secondary factor (see Table 9.2 ). Consider the case of several workers who all ask to be promoted into a single job that opens up. When seniority is the sole factor, the worker with the longest length of service receives the promotion. If seniority is the determining factor, then among the workers who are minimally qualified for the job, the worker with greatest seniority receives the promotion. When seniority is a secondary factor, the worker with greatest seniority among those with relatively equal ability receives the promotion. Seniority is more likely to be the sole factor for layoffs than for promotions or transfers. As such, promotions and transfers are fertile areas for grievances: Individuals vying for promotions have differing perspectives on the ambiguous nature of “minimal qualifications” and “equal ability,” and unions and employers have different views of the relative weight to be accorded to seniority and ability.

A third category of employee rights frequently granted by union contracts is compensation. Unionized workers are significantly more likely than nonunion employees to receive benefits such as health insurance, pensions, life insurance, and the like. Numerous collective bargaining agreements contain provisions pertaining to overtime compensation, premium pay for weekends, rest periods, severance pay, supplemental unemployment benefits, and holidays. A majority of private sector contracts also give employees the right to reporting pay and call-in pay. Reporting pay guarantees that employees will be paid for a certain number of hours (typically four) if they report for work as scheduled but the employer doesn’t have sufficient work. Call-in pay is similar but pertains to situations in which employees are called in to work by the employer.

Finally, nearly every U.S. union contract contains a grievance procedure in which employees are entitled to challenge managerial actions that they feel violate their rights under the contract. The final step of the grievance procedure is almost always binding arbitration. Although only a small fraction of grievances reach the final arbitration step, the possibility of arbitration by a third-party neutral can promote fair consideration of employee grievances at lower levels. Through the grievance procedure, union contracts grant employees the right to a fair hearing when there is a workplace problem. In return, employees are obligated to seek orderly resolutions to their grievances through specified channels and not to use strikes or other economic weapons to pressure management for settlements. This bureaucratic approach to justice restricts grievances to specific contractual violations; this restriction, in turn, significantly limits worker influence over day-to-day work issues.

Table 9.2

JOB RIGHTS

Union contracts can also convey rights and obligations to jobs. Unions representing blue-collar workers frequently negotiate wage rates that are tied to specific jobs, not individuals. In other words, holders of a specific job are entitled to a certain wage rate irrespective of their individual characteristics. A food processing plant might have a single pay rate for bulk unloaders, one for machine operators, another for janitors, and one for machine repairers; and you can read them all in the contract. This is not universally true—salaries for community college professors might be a function of each faculty member’s educational credentials and years of teaching experience, whereas professional athletes typically negotiate their salaries individually within the parameters determined by a union contract. But tying wages to jobs rather than individuals is a significant component of the traditional U.S. union contract for blue-collar workers.

Another aspect of job rights pertains to work assignments: Certain jobs are entitled to perform certain tasks. Unions seek such job rights because of a concern that the employer might whittle away the union-represented jobs by having supervisors expand their duties. Some contracts therefore explicitly prohibit supervisors from doing bargaining unit work (with some exceptions such as training new employees or emergencies). Subcontracting and outsourcing restrictions try to prevent the loss of union jobs by limiting the farming out of work to other employers. Another fear that underlies union pursuit of job rights is that management might try to replace higher-skilled jobs with lower-skilled, and therefore lower-paying, jobs. Some contracts therefore include general language requiring that a job’s usual tasks be assigned to those jobs: “The Company agrees that, to the extent practicable, such work assignments will be made consistent with the principal job duties and skills of an employee’s classification” (this example is from a chemical plant contract). This concern is particularly sharp among skilled workers because they face the greatest risk of having their jobs diluted and even deleted, so contractual language for job rights is frequently most explicit in guaranteeing certain tasks for skilled job classifications (see Table 9.3 ). In return for these various categories of job rights, the holders of these jobs must fulfill the performance standards for these jobs.

Table 9.3

UNION RIGHTS AND OBLIGATIONS

A third category of clauses frequently found in collective bargaining agreements gives unions rights and obligations. It is probably universal for one of the first sections of the contract to include a recognition clause in which the employer recognizes the union as the exclusive bargaining agent for the bargaining unit and affirms the union’s right to represent the employees. A broadly written recognition clause can help unions maintain their strength by including new occupations within the bargaining unit, such as when new positions are created when traditional media companies expand into online ventures. Unions are also concerned with maintaining recognition rights if a business is sold or if a public sector operation is privatized. Under favorable conditions, various legal rulings indicate that a successor employer must recognize and bargain with the union; but to cement this continued recognition, some unions negotiate a successorship clause into their contracts. Such a clause requires a successor employer to recognize and bargain with the existing union; a strong successorship clause further obligates the successor employer to abide by the union contract.

To facilitate communication between a union and the employees, unions traditionally negotiate rights for union leaders to use a bulletin board on company premises and to enter the workplace to meet with employees (without interfering with their work); unions are now trying to supplement this with rights to use company intranet and e-mail systems to communicate with employees. To help the union effectively represent the workers, unions also negotiate for workplace systems of shop stewards. Stewards are employees who are elected by the rank and file or appointed by the union leadership to be the first line of advocates for the workers in ensuring that the contract is not violated. For most workers, stewards are the personification of the union—when there is a problem, employees typically contact their steward. Contracts frequently include clauses in which employers recognize the right of stewards to investigate grievances, and some contracts further specify the number of stewards, grant them special seniority rights (“superseniority”), and indicate that the company will pay the stewards for their time conducting legitimate union business.

Union Security Clauses

The most controversial clauses within the category of union rights pertain to issues of dues and mandatory membership. There are three types of union security clauses: (1) a closed shop, requiring the employer to hire only union members, (2) a union shop, requiring employees to become union members after hired in order to keep their jobs, and (3) an agency shop, requiring employees to pay union dues after hired in order to keep their jobs. The NLRA outlaws the closed shop; right-to-work laws outlaw union and agency shops. But in the 28 states that do not have right-to-work laws, unions are allowed to negotiate union or agency shop provisions into their contracts with employers. The controversial nature of union shop clauses is underscored by the fact that employees can petition the NLRB to hold a special deauthorization poll (not to be confused with a decertification election. In 2008 there were 50 such polls, and union shop clauses were revoked in 18.

The Supreme Court has further determined that union shop clauses are enforceable only as agency shops—workers can be forced to pay dues but not to join the union. In other words, when a union shop or agency shop clause is included in the collective bargaining agreement, a worker can be fired for failing to pay dues but not for refusing to join the union. Furthermore, workers need to pay only the amount of dues that goes toward collective bargaining and contract administration. This right to pay less than full union dues is called Beck rights —named after the 1988 Supreme Court case that established this right (see the accompanying “Ethics in Action” box). In principle this sounds straightforward, but in practice it is complex. Some union expenses are clearly germane to bargaining and administering contracts—salaries for union staff who negotiate contracts or arbitrator fees, for example—and some are not—such as union publications, social activities, and political lobbying. But what about organizing new members? This does not directly support bargaining and contract administration for existing union members, but it supports these activities indirectly by increasing union power. Whether organizing expenses can be charged to employees who exercise their Beck rights has been intensely debated. The NLRB has ruled that organizing expenses for employees in the same competitive market are allowed, whereas the courts have not allowed general organizing expenses. This also raises significant practical issues—especially whether calculating the amount of allowable expenses can be done at the national union level or must be done separately for each local.

Union and agency shop clauses are frequently used in conjunction with a dues check-off provision in which employees can agree to have their union dues automatically deducted from their paychecks and deposited directly with the union. This gives the union a predictable revenue stream and saves union leaders valuable dues-collecting time and energy—though this individual contact might develop stronger linkages between union leaders and rank-and-file workers and prevent the leadership from becoming detached from the membership.

Unions typically try to negotiate union shop or agency shop clauses (in non–right-to-work states) to counter the free-rider problem of bargaining unit members benefiting from the union without paying for it. As we will discuss shortly, labor law requires that unions fulfill a duty of fair representation by representing all employees—members and nonmembers alike—so unions argue that it is unfair to allow free riders to benefit from union representation without sharing the costs by paying dues. Majority rule is also a basic feature of democratic institutions, and any dues-paying requirements are subject to majority approval. On the other hand, right-to-work advocates label this “compulsory unionism” and argue that it violates individual freedoms by depriving workers of their “right to work”—that is, the right to freely choose whether to become union members and pay union dues. The public sector has more restrictions on union security clauses—in other words, there are more right-to-work laws for the public sector (including the federal sector) than the private sector. However, a few states such as Minnesota and Hawaii mandate the agency shop. Agency shop payments in the public sector are frequently called fair share payments, and various states have legislated processes for determining their amount.

Union Obligations

In return for the various rights that a union might be granted by contract clauses, it is obligated to live up to the terms of the complete contract. In particular, unions usually give up the right to strike over grievances and instead must pursue orderly resolution of disputes over the application of the contract through the grievance procedure. This includes respecting the terms of any arbitration awards. Unions can be sued for violating a collective bargaining agreement.

Another union obligation, and a central issue in contract administration for labor unions, is the duty of fair representation . Under the NLRA a union that wins an NLRB Election becomes the exclusive bargaining agent for that bargaining unit. Similar principles apply under the Railway Labor Act and public sector bargaining laws. As early as 1944, the Supreme Court ruled that in return for this privilege of being the exclusive representative, unions have an obligation to fairly and without discrimination represent all bargaining unit employees. This obligation applies to both contract negotiation and administration, though it is frequently discussed in terms of administration. In particular, a union “may not arbitrarily ignore a meritorious grievance or process it in a perfunctory fashion” in a discriminatory or bad faith manner. As specific examples, unions cannot ignore the grievances of African-American workers because of racial discrimination, advocate less strenuously for nonmembers because they haven’t joined the union, or ignore the grievance of a member who is an outspoken political opponent of the union leadership. This does not mean unions have to pursue every grievance all the way to arbitration, but it does mean that unions must have valid reasons for not pursuing a grievance (in particular, that the grievance truly lacks merit). Because the duty of fair representation is rooted in Supreme Court applications of labor law, this obligation is universal and does not depend on the presence of specific clauses in a union contract.

Ethics in Action Union Shops and Beck Rights

Except in right-to-work states, it is common for unions to negotiate union shop clauses into their collective bargaining agreements. However, the Supreme Court has interpreted the NLRA to require only the payment of dues: Union Membership is “whittled down to its financial core” [NLRB v. General Motors Corp. , 373 U.S. 734, 742 (1963)]. Workers can thus satisfy a union shop requirement by paying dues; they do not need to formally join the union. This might seem like a distinction without a difference, but consider two points:

• Nonmembers cannot vote in union elections or to ratify contracts.

• Nonmembers do not have to pay full union dues.

With respect to this last point, the courts have determined that nonmembers need to pay only dues that go toward collective bargaining and contract administration ( Beck rights). As such, nonmembers might only pay 75 percent of the amount of full union dues (the actual amount varies from union to union).

QUESTIONS

1. Union shop clauses are legal, but a court will enforce them only as equivalent to agency shop clauses. Is it ethical for a union steward to show the contract’s union shop clause to new employees to get them to join the union? Before you jump to a quick answer, remember that contracts are ratified by majority votes.

2. Should a union steward have a legal obligation to inform employees of their Beck rights?

3. Should employers have a legal obligation to inform employees of their rights under the NLRA, such as being able to discuss wages and working conditions with their coworkers?

MANAGEMENT RIGHTS

Labor relations are frequently concerned with balancing competing interests of various stakeholders, so it should be unsurprising that union contracts also provide rights to management— especially through conveniently named management rights clauses. Management rights clauses embody management’s longstanding insistence on maintaining sole authority over traditional management functions such as hiring, firing, assigning work, determining job content, and deciding what to produce and how and where to make it. Such clauses are found in 80 percent of private sector contracts. In the public sector, management rights clauses are also frequently found in union contracts, and they are even specified by law in the federal sector by the Civil Service Reform Act and in the state and local sectors by some state bargaining laws.

Two examples are shown in Table 9.4 ; note the close similarities even though one covers unskilled workers in the private sector and the other covers skilled professional workers in the public sector. It is common to trace management rights clauses all the way back to the UAW’s strike against General Motors in 1945–1946. Even after 113 days of being struck, General Motors refused to relinquish its right to manage strategic decisions in the corporate boardroom and daily issues on the factory floor. This established the postwar pattern of union negotiations over wages, benefits, and work rules, but not managerial decisions. Management rights clauses are now deeply ingrained in U.S. labor relations. 35 In fact, management rights clauses are even found in collective bargaining agreements in which the employer is a union and the workers are regular employees of that union (in such situations the employees are represented by a different union, such as the Office and Professional Employees International Union).

Consider again the two management rights clauses in Table 9.4 . In the hotel contract, “management shall have the right to direct the workforce and to determine the policies and methods of operating its Hotel, except as expressly limited by the specific provisions of this Agreement ” (emphasis added). In the community college contract, “Any term or condition of employment not specifically established by this Contract shall remain solely within the discretion of the Employer to modify, establish, or eliminate” (emphasis added). These two provisions capture the reserved rights doctrine of management rights (also called the residual rights doctrine): All management rights not explicitly limited, restricted, or modified by the union contract are reserved by management. Many arbitrators uphold the reserved rights doctrine even if this specific language is not in the contract. The detailed work rules often found in traditional union contracts are a natural reaction by organized labor to this doctrine. If management retains authority over all issues that are not limited, restricted, or modified, then of course unions will seek to explicitly limit, restrict, and modify managerial authority where it serves workers’ interests.

These limitations, restrictions, and modifications largely represent management’s obligations under union contracts. Many of these have already been mentioned in the previous sections: disciplining and discharging workers only for just cause, using seniority as a factor in layoffs and promotions, assigning work to specific job classes, providing call-in pay, allowing shop stewards to investigate grievances, and the like. Union contracts also frequently specify safety standards that management must fulfill. And like both employees and unions, employers are obligated to resolve grievances peacefully through the grievance procedure and to abide by the terms specified not only by the contract, but also by arbitration awards.

There are thousands of union contracts in the U.S. private and public sectors, and many elements of these contracts are similar. This is true across all four categories of contract clauses discussed so far: employee rights and obligations, job rights and obligations, union rights and obligations, and management rights and obligations. But these contracts are not identical. Distinctive provisions are frequently specific to various bargaining units depending on industry, occupation, location, history, and the like. Several examples of unique contract clauses are shown in Table 9.5 .

Table 9.4

Table 9.5

GRIEVANCE PROCEDURES

The elements of union contracts discussed in the previous sections often contain ambiguities and are open to varying interpretations. Does maternity leave include adoption? Is swearing at a supervisor just cause for being fired? How is it determined whether two individuals have equal ability for a promotion? Do management’s traditional powers allow it to create new job categories, or does the inclusion of job classifications in the union contract make this an issue to be negotiated? Conflicts over the interpretation, application, and enforcement of contracts inevitably occur, and contract administration to settle these rights disputes (“grievances”) is a key topic in U.S. labor relations.

Rejecting Unilateral Grievance Resolution Methods

Consider alternative methods for settling grievances. Perhaps one party might unilaterally control how grievances are resolved, whether it be an employer, a union, or a judge. Other options replace unilateral control with dispute resolution procedures that allow multiple parties to participate in grievance resolution. Rejection of the unilateral approach is nearly universal in contemporary U.S. labor relations. Management is unwilling to concede control to unions, and vice versa. In fact, unilateral management control undermines the whole point of collective bargaining: Without a balanced dispute resolution procedure for grievances, workers and workplace justice are at the mercy of employers and markets, which is exactly the situation that the NLRA and public sector bargaining laws seek to improve upon. And resorting to economic weapons to challenge unilateral decisions destroys the goal of industrial peace. In particular, the advantage to employers of signing union contracts is to achieve stability and predictability through employee and union adherence to negotiated rules. This advantage is lost if strikes frequently erupt over these rules. And relying on courts also has significant drawbacks—it is costly, slow, largely beyond the parties’ control, and generally lacking in labor or business expertise.

As a result, the nearly universal method for resolving rights disputes and grievances over the interpretation, application, and enforcement of union contracts in U.S. labor relations is through a grievance procedure that is negotiated into a contract. Although grievance procedures could occasionally be found in the 1800s, the explosion of their adoption and usage came during World War II when the U.S. government leaned heavily on labor and management to resolve disputes through grievance procedures, not strikes, so as not to interrupt vital war production. Today nearly every union contract in the United States—in both the private and public sectors—contains a grievance procedure to resolve allegations by employees or the union that the employer has violated the contract. Note that employees and unions react to managerial actions and raise complaints by filing grievances if they think contractual violations have occurred—in other words, “management acts and the union grieves.”

The Typical Unionized Grievance Procedure

An example of a typical grievance procedure is shown in Table 9.6 . This example has four steps. The first step involves discussions between the employee who has a grievance (the grievant) and his or her supervisor. If the grievant is not satisfied with the outcome of step 1, the grievance can be appealed to step 2, at which time a union representative and a management official from the employee’s department try to settle the dispute. The employee can further appeal the results of the second step to step 3, which is like step 2 but involves higher-level union and management officials. Finally, the union can appeal the step 3 resolution to step 4—binding arbitration.

The numbers of steps vary across union contracts, but multistep procedures with between two and four steps are the norm. The example in Table 9.6 provides for a verbal grievance at first; other grievance procedures might require an initial written grievance. Most grievances are settled in the early steps. Time limits for filing grievances and for appealing to subsequent steps are also important components of unionized grievance procedures. Note that during the grievance process, unions have dual roles as both advocates and processors. As advocates, unions provide assistance and expertise to help grievants win their cases. As processors, unions determine how far to pursue grievances. In particular, unions (not grievants) decide whether to appeal grievances to arbitration, subject to their duty of fair representation.

The Uses of the Grievance Procedure

The grievance procedure provides a fair, orderly, and generally efficient method for resolving rights disputes and enforcing union contracts and is therefore relatively unique in U.S. labor relations in that it receives broad approval from scholars, policymakers, and labor and management practitioners. Employers benefit from an institutionalized system of conflict resolution that avoids strikes and other disruptions. Both employers and unions benefit from continuity, consistency, and a prescribed channel of communication. And employees benefit from due process—the right to have a hearing, be assisted by an advocate if desired, and present evidence in their defense. In other words, the unionized grievance procedure incorporates accepted standards of justice into the workplace. Nonunion grievance procedures—such as open-door policies, peer review panels, or ombudspersons—typically lack due process protections.

The average grievance filing rate in unionized workplaces is perhaps 10–15 grievances per 100 employees per year, but there are large variations in this rate across workplaces and industries—in other words, “formal grievance disputes may be inevitable in unionized workplaces, but the rate at which they emerge certainly is not.” Individual and organizational characteristics appear to partly determine whether grievances are initiated—for example, grievance filers are on average younger than employees who do not file grievances, and grievances are more likely to be filed when employees interact with aggressive supervisors and union stewards and when employees perceive that their power is higher. Grievances are also more likely just before contract negotiations begin. This last fact suggests that the grievance procedure not only provides employees with due process but also gives unions an avenue for pressuring management to further their bargaining goals. Lastly, the grievance procedure appears to contain an element of organizational discipline and punishment. On average, grievance filers and their supervisors experience lower performance ratings and fewer promotion opportunities as well as increased job turnover relative to nonfilers and their supervisors after their grievances are settled. Moreover, grievance activity can reflect management’s monitoring of worker effort, and slight increases in grievance activity can be associated with increased productivity.

Table 9.6

GRIEVANCE ARBITRATION

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?

QUESTIONS

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?

EMPLOYEE DISCIPLINE

One of the most important areas of contract administration is employee discipline and discharge. Employers particularly want to be able to discipline and terminate employees who are substandard performers, and employees do not want to lose their jobs, especially unfairly. In fact, more grievance arbitration hearings pertain to discipline and discharge than to any other topic by a wide margin in both the private and public sectors. Under the employment-at-will doctrine that governs the U.S. employment relationship in the absence of specific statutory restrictions (such as antidiscrimination statutes), employees can be discharged at any time for any reason: “for good cause, for no cause, or even for cause morally wrong.” In a sharp departure from the employment-at-will doctrine, however, over 90 percent of private sector union contracts, and many public sector ones as well, specify that employees can be disciplined and discharged only for “cause” or “just cause.”

Just cause is therefore an important concept in labor relations. In short, the requirement that employees be disciplined or discharged only when there is just cause means that there must be valid, job-related reasons for being disciplined or fired. Because the quasijudicial nature of grievance arbitration includes published arbitration decisions and the use of previous decisions as precedents (just as published court decisions often serve as precedents in other court cases), an extensive system of precedents can guide labor and management thinking about just cause (and numerous other issues). But what do arbitrators use to decide whether the standards of just cause have been fulfilled?

One common method is to apply the seven tests that Arbitrator Carroll Daugherty set forth in a frequently cited 1966 arbitration decision (see Table 9.7 ). First, did the disciplined or discharged worker receive advance notice or warning of the consequences of certain conduct? Some forms of conduct are so obvious and severe that it is assumed that workers will know the consequences—violence, theft, or vandalism, for example. But for many other actions, it does not seem fair to impose discipline for something the employee does not know is against company policy—leaving work during a break, leaving a workstation without a supervisor’s permission, posting something on a bulletin board, or using a company phone to make a local personal call, to name just a few. Second, was the workplace rule, management order, or performance standard that the employee violated reasonably related to employee performance? In other words, just cause discipline requires job-related reasons.

The next three of the seven tests pertain to the extent to which management’s investigation surrounding the discipline or discharge of an employee provided due process. Was the alleged violation thoroughly investigated before the discipline was imposed? Was the investigation fair and objective? Did the investigation reveal convincing proof of guilt? Negative answers to any of these questions undermine due process and just cause. Investigating an employee after imposing discipline looks like an attempt to find evidence to support a predetermined desire to discipline the employee. Just cause, however, is rooted in explicit job Performance Behaviors that trigger discipline. Investigations that are not fair and that do not reveal proof of guilt also cannot be used to support just cause discipline and discharge because they also fail to demonstrate that a valid job performance issue caused the discipline. Rather, clear, convincing, objective, and credible evidence is needed.

The final two of the seven tests of just cause focus on whether the employer’s disciplinary action was appropriate under the circumstances. Was the employer’s discipline nondiscriminatory? Was the disciplinary action reasonably related to the worker’s record and the severity of the conduct? The first of these two underscores the importance of past practice. If other employees have not been disciplined in the past for the same misconduct, how is it justified to discipline the current offender? Such discipline is discriminatory. The last test emphasizes the importance of progressive or corrective discipline. Arbitrators do not look favorably upon punitive penalties. Rather, progressive or corrective discipline provides the opportunity for employees to remedy their poor behavior by having penalties that increase as misconduct is repeated or gets more severe. As such, issues such as absenteeism might first be addressed with a warning. If the problem continues, a suspension should be given; and if it persists, discharge is appropriate. Severe issues like violence, theft, vandalism, and gross insubordination might warrant immediate discharge without the need for progressive or corrective discipline. When arbitrators decide discharge cases, three possible outcomes are typical: The discharge is upheld as being consistent with just cause; the employee is exonerated and reinstated with full back pay; or an intermediate option is awarded in which the employee is reinstated but without full back pay (in effect reducing the discharge to an unpaid suspension).

These seven tests provide an important framework for thinking about just cause, though the extent to which they are applied to specific cases varies from arbitrator to arbitrator. In particular, not all arbitrators insist that strict due process be present in management’s investigation (tests 3, 4, and 5); rather, some arbitrators see the arbitration hearing as the source of due process and are willing to find that just cause was present if some mistakes were made and the other tests (or something comparable) are fulfilled. Due process should nevertheless be a concern among managers because prejudicial investigations are unlikely to be seen by arbitrators as fulfilling the just cause standard. Regardless of the specific tests used to determine just cause, the major elements are job performance, the nature of the investigation and evidence, and the appropriateness of the degree of discipline.

With the proliferation of unjust dismissal lawsuits in the nonunion sector, these are important issues for managers and employees in nonunion as well as unionized situations. Additionally, along with the duty of fair representation, the seven tests can shed light on a popular criticism of unions—that they help undeserving workers keep their jobs. Because of the duty of fair representation, unions have an obligation to represent all workers fairly, and thus unions are sometimes put in the awkward role of advocating on behalf of a poorly performing worker—but this is their legal obligation. Moreover, based on the seven tests, if the union can help a poorly performing worker keep a job, management must not be fulfilling the standards of just cause—perhaps the performance has not been documented adequately, or the appropriate corrective steps have not been taken.

A final important issue for the topic of employee discipline is an employee’s right to representation. The Supreme Court has interpreted the right of employees to engage in concerted activity for mutual protection (as provided by Section 7 of the NLRA) to mean that an employee who believes that discipline will result from a meeting with management can insist that a union representative be present. This is called an employee’s Weingarten rights after the name of the initial 1975 Supreme Court decision. The union representative is entitled to assist the employee but not to obstruct reasonable questioning by the employer. An ongoing controversy is whether nonunion employees have a similar right to have a coworker present when they expect discipline—after all, Section 7 does not pertain solely to unionized situations. During the administration of President Clinton, the NLRB extended Weingarten rights to nonunion workers, but this extension was overturned by the more conservative Bush-era NLRB in 2004. The Obama-era NLRB might restore the Clinton-era approach, but until that happens only union workers are entitled to Weingarten rights.

Table 9.7