Chapter 7

• Jurisdiction: United States

Chapter 7

ADR in Relation to Collectively Bargained Agreements

§ 7.01 Introduction to Alternate Dispute Resolution and Labor Relations

Only between 10 percent and 15 percent of the civilian private sector work force in the United States is employed in units which are represented by unions. During the 1950s, unions represented about 35 percent of all employees in this category, a percentage that has declined steadily in comparatively recent decades.¹ Unions remain strong in their traditional base of core manufacturing industries, including automobiles, steel, and rubber. They are deeply entrenched in public sector employment, particularly outside the south.

No discussion of alternate dispute resolution law, systems, and problems would be complete without considering how the presence of unions impacts the ability of employers, acting in concert with unions, or unilaterally, to set up alternate dispute resolution systems that may include, and sometimes mandate, coverage of the statutory rights of unionized employees. When unions are present, counsel for each party will frequently have to consider their impact on the strategies and tactics to be used in alternate dispute resolution.

For employers who have union represented employees, questions will arise about the interrelationship of alternate dispute resolution law, national and state labor relations law, and employment related statutory rights, such as nondiscrimination, overtime pay, and equal pay. Employers, unions, counsel, and employees may need to know how the presence or absence of a union enlarges, varies, or diminishes their, or their client’s, duties, responsibilities or protections. Employers who are not unionized will need to know how they will be impacted, in terms of extant alternate dispute resolution systems, should union organizing drives result in the unionization of their work places.

No discussion of work place alternate dispute resolution would be complete absent an examination of the way in which alternate dispute resolution laws interact with civil rights, labor, and employment laws and of the impacts which flow from those interactions. The entire body of these laws, taken as a coherent whole, must be examined, as they overlap to a considerable extent and therefore raise issues of consistency and application. It is entirely predictable and accurate to say that tensions between these laws do arise.

This chapter is primarily concerned with arbitration, not mediation or other forms of alternative dispute resolution. In the author’s long labor relations experience, while virtually all labor agreements contain grievance procedures with most ending in final and binding arbitration, very few contain mediation provisions using outside neutral third-party mediators (except for grievances involving such statutory rights as race or sex discrimination).² Why is mediation not prevalent in the administration of labor agreements? Generally, labor unions and employers have long standing relationships and solve their problems without outside intervention, or they refer the matter for final and binding arbitration. For this reason, for purposes of this chapter, “alternative dispute resolution” will generally be used interchangeably with “arbitration.”

This chapter looks at the development of alternate dispute resolution in the unionized context, in its decades-long use of arbitration. The evolution of arbitration as a means of dispute resolution by companies, unions, and employees is examined. Although there are two forms of labor arbitration, “interest arbitration,” which relates to arbitration to determine the contents of a labor agreement between the employer and the union, and “grievance arbitration,” which relates to interpretation of an existing agreement, “interest arbitration” is relatively rare, and will not be discussed in this chapter.

Why is a review of labor arbitration important in a book on alternate dispute resolution? Court-blessed arbitration of employment related disputes, including statutory rights, is of relatively recent vintage,³ and there has been proportionately less experience with how such systems will work. Employers, employees, unions, and counsel may learn much by looking to the wide body of law and experience under labor arbitration systems.

It is essential to keep in mind that labor arbitration systems are the result of negotiated arrangements between often powerful institutional parties, who are concerned with collective, as opposed to individual, rights.⁴ As this chapter will explore, the collective approach creates differences, and they may well be critical ones.⁵ For employers whose employees are not in units that are represented by unions and who are free to establish alternate dispute resolution procedures fully unilaterally, much may be learned from the advantages and mistakes of labor arbitration. Counsel may look to the similarities, and differences, between labor arbitration and arbitration for unrepresented employees, to support arguments in favor of, or against, applying arbitration to the statutory rights claims of unrepresented employees.

The application of labor arbitration principles to alternate dispute resolution arbitrations for employees who are not union represented raises a number of questions. In labor arbitrations, arbitrators are selected pursuant to, and derive their authority from, the collectively bargained agreement. They are constrained to avoid dispensing their own brands of industrial justice.⁶ In alternate dispute resolution arbitrations, in the absence of a labor agreement, questions inevitably must arise as to the source and limits on an arbitrator’s jurisdiction. Employers’ counsel and human resources managers, in drawing up the documents under which arbitrators will be given jurisdiction, must exercise great care to set these limits forth, or they will risk the possibility of outcomes that are far outside of expected parameters. Many labor agreements contain limitations on the selection, authority, and jurisdiction of arbitrators. A review of how these provisions have been interpreted will prove useful before an employer formulates an alternate dispute resolution arbitration procedure.

§ 7.02 Applicable Federal and State Statutes

Essential to any understanding of alternate dispute resolution in relation to unions is an understanding of the applicable federal and state statutes and executive orders that define labor relations law in the United States. No discussion of alternate dispute resolution in a unionized context is meaningful unless the reader places the work force in question in the appropriate labor relations category. There are, in essence, four such categories for unionized employees:

(1) Private sector employees of employers who meet certain interstate commerce levels (most private sector employers), and who are not common carriers in the railway or airline industries;

(2) Private sector employees of employers who are common carriers involved in the railway or airline industries;

(3) Private sector employees of employers who do not meet the necessary interstate commerce levels to be covered by federal law; and

(4) Public sector employees.

The majority of private sector employees fall into the first category and their labor relations are governed exclusively by federal law, under the National Labor Relations Act (NLRA).⁷ The NLRA was originally passed in 1935, and was popularly known as the Wagner Act. The Act was significantly amended over President Truman’s veto in 1947, in what is termed the Taft-Hartley Act. The revised NLRA is also sometimes referenced as the Labor Management Relations Act (LMRA). Agricultural workers and persons covered under the RLA are excluded from Nation Labor Relations Act coverage.⁸ Unions are covered employers in their capacities as employers of their own staffs.⁹ Health care employers, including nonprofits, are covered under statutory amendments.¹⁰ Employees of the Postal Service are specifically covered by statutory provision.¹¹ Private sector colleges and universities have been covered since 1970, under a National Labor Relations Board decision.¹²

Although many employers that do not employ any union-represented employees might be surprised by the applicability of the NLRA to their work places, that statute does provide certain rights to employees who are not represented by a union, rights that impinge on mandatory pre-dispute arbitration agreements covering statutory claims. In 2006, the National Labor Relations Board found an employer’s mandatory arbitration agreement, which neither referred to the NLRA nor on its face restricted the right to file an NLRA charge, unlawful under §§ 8 (a)(1) and 8(a)(4) of the Act, prohibiting interference with employee rights to form and join unions and access the Board, respectively. The Board held that employees cannot waive their right to file charges with the Board.¹³

The Board concluded that employees have an unfettered right to bring unfair labor practices before the Board. As a result, an arbitration policy is unenforceable as to claims under the National Labor Relations Act. The Board’s decision turned on the phrase “any other” claims recognized by federal law in the pre-dispute mandatory arbitration agreement and its conclusion that this language would be reasonably read by employees as cutting off the filing of unfair labor practice charges with the Board. The Board’s remedy: rescind the arbitration policy at all locations; post remedial notices; remove all unlawful waivers from employees’ files; and notify present and former employees that the waivers would not be used in any form.¹⁴ The remedy thus went far beyond merely remedying the defect regarding the National Labor Relations Act; it voided the entire arbitration agreement.¹⁵ This case makes clear that employers need pay attention not only to what they cover in arbitration clauses, but must make explicit that certain claims, such as National...