In workplaces organized under collective bargaining, disputes between labor and management can impact productivity, morale, and the overall work environment. Grievance arbitration provides an effective way to resolve labor disputes and can act as an important final step in union grievance procedures. In this article, we’ll explore why unions and management often include arbitration provisions in their collective bargaining agreements, the types of labor disputes commonly resolved through arbitration, and how the labor arbitration process works.
What is Labor Union Arbitration?
Labor arbitration is a process in which a neutral third party — the arbitrator — resolves disputes arising under an existing collective bargaining agreement (CBA). Formal disputes generally arise when an employee or union files a grievance alleging that the employer violated rights established by the CBA. If the union and management cannot resolve the dispute during earlier procedural stages, the dispute proceeds to arbitration. It’s important to note that grievance arbitration is distinct from interest arbitration, which involves resolving disputes over the terms of a new or revised collective bargaining agreement rather than disputes arising under an existing agreement.
In arbitration, the appointed neutral arbitrator conducts a formal hearing and issues a final and binding award. Labor arbitration acts as an alternative to litigation for resolving labor disputes. While arbitration shares some similarities to litigation, it’s designed to have fewer procedural steps, more flexibility, and potentially lead to resolution in a quicker and less costly manner. Typically, grievance arbitration is administered by a neutral, third-party organization, such as the American Arbitration Association® (AAA®).
Why Do Parties Choose Arbitration for Labor Disputes?
In labor relations, arbitration has long served as an important mechanism for resolving disputes between unions and management. Arbitration clauses are often included in CBAs and are tailored to the applicable industry and relationship between the parties. Because unions and management that are parties to a labor dispute will continue their collective bargaining relationship after the conflict is resolved, it’s important to try to limit strain on the working relationship. Arbitration provides flexible and streamlined dispute resolution procedures that allow unions and management to address their concerns efficiently within the context of an ongoing collective bargaining framework.
Types of Labor Disputes Resolved Through Arbitration
Grievance arbitration addresses many types of disputes arising under CBAs, including:
Disciplinary Actions and Discharges
Employee demotion, suspension, or termination may give rise to a labor dispute. Many CBAs require employers to establish “just cause” for discipline or termination. Disputes may concern whether the alleged misconduct occurred, whether the disciplinary action was proportionate to the offense, whether progressive discipline requirements were followed, or whether the employer complied with other procedural requirements of the CBA.
Wages, Hours and Employee Benefits
Many non-disciplinary labor grievances involve contract interpretation, where the parties disagree over how the collective bargaining agreement applies to issues such as wages, overtime, scheduling, or benefits. Unions and employers may disagree over whether overtime hours, retroactive pay, or other pay differentials were calculated correctly. Grievances may also involve unexpected scheduling changes, mandatory overtime, altered break times, or changes to employee benefits such as healthcare coverage, retirement plans, or PTO.
Seniority and Job Assignments
Labor disputes may arise over rank and seniority, as well as the factors that played a role in promotions and job placements. For instance, a union may file a grievance when an employee is laid off and dispute whether the employer bypassed seniority rules in doing so. Unions may file grievances if a senior employee is passed over for a promotion in favor of a junior employee. Disputes may also arise over whether the employer fairly assigned preferred shifts, overtime hours, or specific work tasks.
Working Conditions and Workplace Rules
Grievances may arise between unions and employers concerning the workplace environment, safety, and rules. Disputes may involve issues such as unsafe working conditions, hazardous materials, or inadequate or faulty personal protective equipment (PPE). Disputes may also arise over new or revised workplace policies, with the union arguing that changes involving attendance, drug testing, dress codes, or other procedures violate the CBA.
Collective Bargaining Agreement Interpretation
Disagreements may arise over the application and meaning of collective bargaining agreements. This is distinct from negotiating or renegotiating a CBA, which process is sometimes conducted with assistance from federal or state mediation agencies if the parties reach an impasse.
Strikes, Lockouts and Related Contract Disputes
Disputes may arise during a strike, lockout, or other industrial action. Typically, these disputes center on alleged violations of “no-strike” or “no-lockout” provisions. The parties may disagree over whether the conduct violated the CBA or whether employee or employer actions are subject to contractual remedies. Not every dispute involving a strike or other industrial action can be administered through grievance arbitration; statutory or representational issues may need to be addressed by a labor agency or court.
Pension and Specialized Benefit Disputes
Disagreements may arise over retirement benefits and employee benefits plans. These can include grievances over improper calculations, benefit eligibility, or late or unpaid employer contributions when those issues arise under the terms of a collective bargaining agreement.
How Labor Arbitration Fits into the Grievance Process
Labor arbitration is often the final step in the grievance process, but not every grievance reaches the arbitration phase. The exact structure of the grievance process is established by the CBA. A typical procedure may begin with an informal discussion involving the employee, a union representative, and a supervisor, followed by a written grievance and one or more appeals to higher levels of management.
It is typically only after the required grievance steps have been completed or waived that the dispute proceeds to arbitration or another form of alternative dispute resolution (ADR). Grievance mediation may be an optional next step in the process, allowing the parties to seek a mutually agreeable solution, with a neutral mediator facilitating communications, before initiating arbitration. If mediation is unable to resolve the dispute, the union can then formally appeal to move forward with arbitration, in accordance with the provisions specified in the CBA. In labor relations, arbitration often acts as an essential component of the grievance process and helps provide a final, efficient way to resolve disputes without resorting to a lengthy court battle.
How the Labor Arbitration Process Works
Arbitration is designed to be a fair, neutral process for resolving disputes. The arbitration process is governed by the terms outlined in the CBA between the parties, applicable federal, state, and industry labor laws, and the rules and procedures established by the administering organization. Many unions and management that have a collective bargaining relationship trust established ADR organizations such as the AAA to administer their arbitration disputes. Although specific procedures may vary depending on the governing agreement and administering organization, the overall arbitration process is generally similar. At the AAA, labor arbitration is conducted within a standardized framework and proceeds under the AAA Labor Arbitration Rules. Typically, a case proceeds as follows:
Filing and Arbitrator Selection
Once all filing requirements have been met, the AAA acknowledges receipt of the filing to all parties. Next, the arbitrator is selected. If the parties’ dispute resolution clause does not specify how the arbitrator is to be chosen, the arbitrator is generally selected through the rank and strike method from a list the AAA provides. The AAA encourages the parties to agree on the arbitrator if possible.
Information Exchange
Once the AAA appoints an arbitrator to the case, the parties exchange information, such as documents, witness lists, and other evidence in accordance with the CBA and the applicable rules. Traditional discovery procedures are generally not part of labor arbitration.
The Arbitration Hearing and Award
At the hearing, the parties present their evidence, arguments, and witness testimony. In many cases, the parties also submit post-hearing briefs before the arbitrator begins final deliberations, although these are not permitted under the AAA’s Expedited Procedures of the Labor Arbitration Rules. After the hearing and the filing of any post-hearing briefs, the arbitrator has a set window of time to review both sides’ evidence and arguments and issue a final and binding award. The timeline for issuing the award is governed by the CBA and, where applicable, the AAA Labor Arbitration Rules, with any extension requiring the agreement of all parties. Before the award is issued, the parties may mutually agree to pursue grievance mediation or another negotiated resolution.
Taking the Next Step for Your Labor Dispute
Parties to a labor dispute typically seek an established, impartial organization with a strong track record for resolving labor disputes efficiently. The AAA provides a standardized, neutral framework for unions and management to resolve labor disputes. The AAA administers labor arbitration cases across many industries with unionized workforces, including healthcare and nursing, education, manufacturing, and public safety. Our case management staff and experienced arbitrators are well-equipped to handle even the most complex cases with multiple unions or parties. Learn more about how the AAA can support labor dispute resolution and how to add a contract clause naming the AAA to your CBA: