Employee Free Choice Act: Is Interest Arbitration a Good Thing?

The Employee Free Choice Act’s mandatory arbitration provision has received way too little attention in the arguments over EFCA. This week Thomas Kochan posted a spirited defense of interest arbitration on the Center for “American Progress” blog in his attempt to add some context. While I disagree with much of what he says, it certainly gets the discussion focused on the “how would this whole arbitration thing work” question. He identifies 6 points of a solid arbitration system, and recommends that they be used as the framework for interest arbitration under the Free Choice Act (which is a backhanded way of pointing out one of the many glaring weaknesses of EFCA: that it provides exactly no guidance on how this arbitration system might work… but I digress).

Kochan’s main argument is that the experience of using arbitration in the public sector and in Canada proves that it will work here. I have a few thoughts. First, the public sector experience is not equivalent, because you are not really dealing with a competitive market (this is also why union density is so much higher in the public sector). Further, it is not true to say that these public sector arbitration agreements do not result in unsustainable contracts. Many communities now outsource what used to be “public sector” jobs because of these increased costs.

Also, the idea that these arbitrators will only be able to deal with “mandatory” subjects and not management rights is ridiculous – wages, hours and working conditions deals in almost every way with the way the company chooses to run its business. Every word of a contract is an a restriction on these rights – and putting that decision in the hands of government appointed arbitrators (even if it is 1 neutral and 2 non-neutrals) is dangerous. Kochan says he is not aware of an example where interest arbitration has increased costs. Just look at the recent Wal-Mart case in Canada – the arbitrator imposed a huge 30% wage increase and wiped out that Tire and Lube unit based on costs.

And his last point is the most telling – the imposed agreements will mirror other agreements. That is exactly what unions want. In the short run this arrangement “levels the playing field” so all companies have a similar “industry” agreement (just like the UAW had with the auto companies). In the long run it is disastrous, and is the reason heavily unionized sectors of our economy are going bye-bye. Companies must have the ability to negotiate an agreement that best fits their business, and union members should have the opportunity to either accept or reject those terms. Putting the negotiations into the hands of arbitrators (whether qualified or not, they still don’t have “skin in the game”) is dangerous.

Kochan argues the “urgent need” for some type of arbitration framework based on the fact that first contracts are only achieved in 55% of cases. But does this statistic mean that there is a compelling need for mandatory arbitration? Lots of negotiations fail for all kinds of reasons.  Negotiations between companies and vendors fail. Negotiations between tenants and landlords fail. Negotiations between prospective car buyers and car dealers fail. Negotiations between spouses fail. Does this mean that the government should be called in to settle these negotiations without the agreement of both parties? I don’t think so.

Labor negotiations fail for a lot of reasons, and infrequently does it have anything to do with employer misconduct. Often these negotiations fail because of the union. Unions often promise employees the moon to get them to join, and when those promises don’t come true employees get upset. This forces the union to attempt to get what it promised, no matter how outrageous. The employer rejects these proposals and the union is put in a bad spot. Sometimes they convince employees that they need to be patient and wait for a future contract. Sometimes they just quit. But just because no contract is entered does not mean that the process doesn’t work.

Where bargaining fails due to employer misconduct there should be a penalty. But in cases where the parties bargain in good faith and fail to reach an agreement the government should not step in and force a contract on the parties.

Wanted! Employee Free Choice Act Super Arbitrator!

In Today’s Issue: Wanted! Employee Free Choice Act Super Arbitrator!

If you or someone you know fits this profile, contact us immediately!

My name is Arbitrating Andy.  I’m a highly seasoned arbitrator who is flawlessly skilled at settling contracts between unions and private-sector employers in less than 90 days.  My track record consistently demonstrates my rare to ability mediate effectively without neutrality within extremely short periods.

1.  I am active on the FMCS (Federal Mediation and Conciliation Service – the arbitration federal agency named in the proposed legislation) listed amongst arbitrators.

2. My documented engagements show that sometime after 1990 I served as the first-chair negotiator during the successful negotiation of a first contract between a union and a private-sector employer.  I completed the contract in less than 90 days after the union was certified as the collective bargaining representative in an NLRB-supervised election.

3. The bargaining unit covered by this contract had at least 100 members.

4. The bargaining unit in question was not subject to a neutrality agreement or any other type agreement that would allow union representation without opposition (for example: there was no “master agreement” in effect that said if a new unit is established the master agreement would apply and only local issues would be negotiated).

Reward Available NOW!

If you know or suspect anyone meets the above criteria or know someone interested in applying, reply to this email. If your person meets the qualifications, they may be entitled to a reward.  Labor Relations Institute is offering a $10,000 prize (payment to be made to the “super arbitrator’s charity of choice) to the first Federal arbitrator who can show they have settled a first contract between a union and a private-sector employer in less than 90 days.

Why Are We Doing This?

You are probably wondering why we are doing this. We are exposing a key flaw of the Employee Free Choice Act.

The Employee Free Choice Act puts a 90-day limit on the bargaining process before the employer and union members are effectively removed from the negotiation. In our experience, this timeline is simply unrealistic.

Unless there are a large number of Super arbitrators out there (we have yet to meet even one) this unrealistic timeline will be disastrous. To make this point, we’re offering one dollar for each of the 10,000 union elections we’ve been involved in.  So far…as of early March 2008, not a single arbitrator has come forward to accept this prize.

We oppose all three sections of the Employee Free Choice Act: card check, binding arbitration and increased employer penalties, but the arbitration timeframe is the most dangerous, and overlooked part of the legislation.

You probably have noticed the card check gets all the attention.  The idea of taking away people’s right to vote is such a divisive and emotionally charged issue. However, this is only a smoke screen for the true fatal flaw, which is the horrible arbitration process.  The arbitration process takes power away from the employers and union members by putting the long-term fate of the company in the hands of people unqualified to make those decisions, and who don’t have a stake in the outcome of those decisions.

Get informed on how the EFCA effects your business and your employees.

To your success,

Phillip Wilson

Next Issue: Imagine a Union Organizer…Holding Your Employee Spellbound for 30 Minutes or more?