CHAPTER 12: THE ARBITRATION PROCESS
LABOR NEWS: ARBITRATION OF EMPLOYMENT DISPUTES ON THE RISE
CHAPTER 12: OUTLINE
I. Types of Arbitration
A. Interest—no contract exists, usually a first contract situation
B. Rights—interpretation of an existing clause
C. Demand for Arbitration (Figure 12-2)
2. Private contract between labor and management
D. Advantages of Arbitration
2. Reduction of labor strikes
4. Final and binding decision
6. Courts will uphold decision on interpreting contract whether they agree
with the finding or not (Case 12.1)
II. History and Legal State of Arbitration
A. First arbitration case: 1871, Ohio—coal industry Figure 12-1 Arbitration
Provision
B. Supreme Court cases: Lincoln Mills, Steelworkers Trilogy
1. Lincoln Mills Case. Court should enforce collective bargaining
agreements providing for binding arbitration.
3. Factors considered by arbitrators:
a. Past practice, if particular action complained of has long standing
history.
III. Arbitration of Statutory Rights in Union and Nonunion Cases
A. Public Policy Exceptions to the requirement to arbitrate
1. Title VII cases, established in Alexander v. Gardner-Denver
B. Federal Arbitration Act and Individual Employment Agreements
IV. Selecting the Arbitrator (Profile 12-2: William C. Heekin)
A. Both labor and management select arbitrator
B. May be permanent arbitrator or one selected on an ad hoc basis
C. Agencies
2. Federal Mediation and Conciliation Services (Table 12–1)
D. Qualification of Arbitrators
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2. Integrity
4. Legal training
E. Tripartite Arbitration Board
2. Example of a panel in a CBA: Article 27
V. Determining Arbitrability
A. If both parties submit question for arbitration, no question as to arbitrability.
B. If one party submits the dispute
1. Party challenging may seek temporary injunction or stay of arbitration.
3. Issue of arbitration may be considered when award is taken to court for
review or enforcement.
C. Warrior and Gulf. Restricted the court’s review to whether reluctant party agreed
to arbitration in CB agreement
VI. Hearing Procedure
A. Opening Statement
1. Initiating party goes first except in discipline and discharge cases, then
company goes first.
2. Set groundwork.
a. Identify issue.
B. Rules of Evidence
1. Determined by arbitrator
C. Assessing Credibility of Witnesses
1. Arbitrator must decide how much weight to give each witness’s
testimony.
D. Presenting Documents
1. Copy given to arbitrator and other party
E. Examination of Witnesses
2. Cross-examination.
F. Summation
1. Both parties given equal time for closing statements.
a. Summarize and emphasize relevant facts and issues.
G. The Arbitrator’s Award and Opinion
1. Award is the decision of the case and includes settlement terms such as
award of back pay, reinstatement of job, and so on.
VII. Case Preparation
A. Study original statement.
B. Determine arbitrator’s role.
C. Review CB agreement.
D. Assemble all necessary documents.
VIII. Arbitrator’s Decision Criteria
A. The criteria most arbitrators use to decide cases are the language of the labor
contract, past practice of the parties, and the fairness of the issue.
IX. Contractual Issues Subject To Arbitration (Table 12-2)
A. Just Cause—varies from case to case. Case 12.2 is a just cause case involving a
physical attack of a supervisor.
B. Factors to be used to determine whether a company has just cause for
disciplining employees include:
2. Investigation
4. Equal treatment
6. Rule of reason
7. Internal consistency
C. Remedies of Arbitrator in Overturning Management
1. Reinstatement
3. Reducing discharge or suspension
D. “Tips from the Experts” discusses common violations of both union and
X. Arbitration issues in the Public Sector
A. Mediation—provided for in most states
1. No authority—tries to bring parties together
B. Fact Finding and advisory arbitration
3. Has been successful in public sector
C. Interest Arbitration – a panel makes a final and binding decision, legality
Questioned because of sovereignty doctrine
D. Rights Arbitration (Case 12-4)
1. Panel makes final and binding decision.
3. Critics think it undermines the need for reasonable negotiating.
CHAPTER 12: CASE DISCUSSION
Case 12.1: Arbitrability in Major League Sports
1. Explain why you agree or disagree with the Supreme Court’s decision to send Garvey’s
claim back to the arbitrator.
Agree. The strength of the arbitration system within the labor relations context is that the
2. Garvey argued that the arbitrator rejected the evidence he presented that the Padres
wanted to renew his contract because, at a previous hearing, the Padres denied wanting to
renew Garvey’s contract. Do you think the arbitrator was right to decide Garvey’s case
on evidence from a previous arbitration?
Case 12.2: Just Cause
1. Do you agree with this arbitrator’s decision? Why or why not?
2. What would explain the company’s actions in this case?
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Case 12.3: Absenteeism at Weber Aircraft
1. A no-fault attendance policy is supposed to recognize the problem absenteeism causes in
the workplace, regardless of the reason. Do you think the no-fault policy in this case does
that?
2. Can you suggest reasons why a no-fault attendance policy is a good policy?
Case 12.4: Public Safety and Random Drug Tests
1. Do you think the outcome of this case would have been different if the employee had
tested positive for cocaine instead of marijuana?
2. Do you think that having an arbitrator should overrule the employer’s decision to
discharge someone who has failed a drug test even though the employer followed the
contract provisions?
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CHAPTER 12: END CASE DISCUSSION
Case Study 12.1: Drug and Alcohol Testing
Decision:
The arbitrator found that the drug-testing policy instituted by the company was not reasonable.
The arbitrator noted that as the policy works, a new employee is tested and is on the job three or
four days before the results of the test is known. The low level cut-off of 10NG–NL is not
consistent with denying employment to an employee. Such a low reading is obviously
unreasonable as the sole determinant of continued employment when nothing dilatorious is
detected in an employee’s performance during that period. Although the company was correct in
saying that the union knew of the testing in advance, the union had informed the company that it
was in disagreement with the policy. Furthermore, the company had not instituted the drug abuse
policy other than at the DuPont location. Therefore, the question of equity arose. The arbitrator,
therefore, found in favor of the employee because the test was arbitrary and did not indicate on
the job impairment.
Questions for Discussion
1. Did the company have a legitimate business reason for instituting a drug-testing program
during the term of the contract?
2. Did the company conduct the drug-testing program properly?
3. As the arbitrator, would you reverse or uphold the dismissal of the grievant? Explain your
answer.
Case Study 12.2: Arbitrability
Decision:
The Circuit Court agreed with the Lower Court and referred the issue to the arbitrator to decide
arbitrability. However, the Supreme Court reversed the Circuit Court and reiterated the rules cited
by the company.
Questions for Discussion
1. Should the court decide whether there is an issue to arbitrate or should an arbitrator?
Why?
2. Give the reasons you think arbitration is a superior resolution process to court action in
contract disputes.
3. Give the reasons you think a court action is a superior resolution to arbitration process in
contract disputes.
CHAPTER 12: REVIEW QUESTIONS
1. Describe how the legal foundation for arbitration as it exists today in the United States
was developed.
2. Discuss the five principles that govern the arbitration of grievances under collective
bargaining.
From the Lincoln Mills and Trilogy cases:
3. Explain how the change of ownership of a company affects the duty to arbitrate.
4. What is the process normally utilized in the selection of an arbitrator?
The American Arbitration Association has developed a four-step process as the system
utilized for selecting an arbitrator.
a. On receiving the demand for arbitration or submission agreement, the tribunal
How does the selected arbitrator interpret ambiguous contract provisions?
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5. How is binding arbitration superior to the courts in settling labor disputes?
The U.S. Supreme Court has generally left the arbitration process up to arbitrators
How does it differ from mediation and conciliation?
6. What information can be presented as evidence during arbitration proceedings?
It is widely recognized that unless the parties expressly require strict legal rules of
What are the usual hearing procedures?
Hearing Procedures:
a. An opening statement by the initiating party
b. An opening statement by the other side
7. Can a party harm its own case during arbitration proceedings? If so, how?
A party may harm its case by the following practices:
a. Using arbitration and arbitration costs as a harassing technique.
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8. How does an arbitrator determine that a company had just cause for taking a disciplinary
action?
The Bureau of National Affairs has listed tests for determining whether a company had
just cause for disciplining an employee as presented by some arbitrators:
a. Is the employee given adequate oral or printed warning as to the consequences of
What remedy might an arbitrator choose if a company did not have just cause?
The more common remedies utilized by arbitrators in overturning management actions in
discipline and discharge cases include:
9. What are the advantages and disadvantages of using arbitration to settle nonlabor issues
such as consumer complaints, employer-employee disputes and so on?
Positives:
a. Expediency – a trial could be delayed because of a backlog in the court system
b. Cost – The parties can determine which party will bear the cost of the arbitration and
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e. Confidentiality – Arbitration awards are generally more confidential than court
judgments, a potential advantage to either or both of the parties. Moreover, the parties
can expressly agree to keep the decision confidential.
f. Finality – An arbitration award is typically more final than a court decision. There is no
10. Discuss the issues an arbitrator might use in deciding a discharge case involving drug
abuse.