Resolving Disagreements

Labor arbitration has been used as an alternative to strikes to resolve labor disputes for more than a century.

Learning Objective

Distinguish between interest arbitration and grievance arbitration

Key Points

There are two types of labor arbitration: interest arbitration and grievance arbitration.
Governments, in addition to labor organizations, rely on arbitration to resolve particularly large labor disputes.
Unions and employers have used arbitration to resolve employee and union grievances arising under a collective bargaining agreement.
The Supreme Court has held that grievance arbitration is a preferred dispute resolution technique and that courts cannot overturn arbitrators' awards, unless the award does not draw its essence from the collective bargaining agreement.

Terms

arbitration
In general, a form of justice where both parties designate a person whose ruling they will accept formally. More specifically in Market Anarchist (market anarchy) theory, arbitration designates the process by which two agencies pre-negotiate a set of common rules in anticipation of cases where a customer from each agency is involved in a dispute.
grievance arbitration
Provides a method for resolving disputes over the interpretation and application of a collective bargaining agreement.
interest arbitration
Provides a method for resolving disputes about the terms to be included in a new contract when the parties are unable to agree.

Examples

The Coal Strike of 1902 was a strike by the United Mine Workers of America in the anthracite coal fields of eastern Pennsylvania. The strikers were asking for higher wages, shorter workdays, and the recognition of their union. The strike threatened to shut down the winter fuel supply to all major cities. President Theodore Roosevelt became involved and set up a fact-finding commission that suspended the strike. The strike never resumed, as the miners received more pay for fewer hours; the owners got a higher price for coal, and did not recognize the trade union as a bargaining agent. It was the first labor episode in which the federal government intervened as a neutral arbitrator.
The United Steelworkers of America adopted an elaborate form of interest arbitration, known as the Experimental Negotiating Agreement, in the 1970s as a means of avoiding the long and costly strikes that had made the industry vulnerable to foreign competition.
Major League Baseball uses a variant of interest arbitration, in which an arbitrator chooses between the two sides' final offers, to set the terms for contracts for players who are not eligible for free agency. Interest arbitration is now most frequently used by public employees who have no right to strike (for example,, law enforcement and firefighters).

Full Text

Labor Arbitration

Arbitration has been used as a means of resolving labor disputes for more than a century. Labor organizations in the United States, such as the National Labor Union, called for arbitration as early as 1866 as an alternative to strikes to resolve disputes over the wages, benefits and other rights that workers enjoy. Governments have also relied on arbitration to resolve particularly large labor disputes, such as the Coal Strike of 1902.

Types of Labor Arbitration

Labor arbitration comes in two varieties: interest arbitration, which provides a method for resolving disputes about the terms to be included in a new contract when the parties are unable to agree, and grievance arbitration, which provides a method for resolving disputes over the interpretation and application of a collective bargaining agreement.

Interest Arbitration

This type of arbitration, wherein a neutral arbitrator decides the terms of the collective bargaining agreement, is commonly known as interest arbitration. The United Steelworkers of America adopted an elaborate form of interest arbitration, known as the Experimental Negotiating Agreement, in the 1970s as a means of avoiding the long and costly strikes that had made the industry vulnerable to foreign competition.

Major League Baseball uses a variant of interest arbitration, in which an arbitrator chooses between the two sides' final offers, to set the terms for contracts for players who are not eligible for free agency. Interest arbitration is now most frequently used by public employees who have no right to strike (for example, law enforcement and firefighters).

Grievance Arbitration

Unions and employers have also employed arbitration to resolve employee and union grievances arising under a collective bargaining agreement. The Amalgamated Clothing Workers of America made arbitration a central element of the Protocol of Peace it negotiated with garment manufacturers in the second decade of the twentieth century. Grievance arbitration became even more popular during World War II, when most unions had adopted a no-strike pledge.

Arbitration in the Eyes of the Law

The Supreme Court subsequently made labor arbitration a key aspect of federal labor policy in three cases which came to be known as the Steelworkers' Trilogy. The Court held that grievance arbitration was a preferred dispute resolution technique and that courts could not overturn arbitrators' awards unless the award does not draw its essence from the collective bargaining agreement.

These protections for arbitrator awards are premised on the union-management system, which provides both parties with due process. Due process in this context means that both parties have experienced representation throughout the process, and that the arbitrators practice only as neutrals.

Political Cartoon about the Anthracite Coal Strike

The two sides were supposed to listen to expert testimony and come to a friendly agreement; cartoon from the Cleveland Dealer

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