EFCA’s First Contract Compulsory Arbitration Provisions Could Be Disastrous

Posted June 22, 2009 at 11:18am

While most of the debate over the euphemistically titled Employee Free Choice Act initially centered on the use of card checks instead of secret ballot elections to determine whether employees want union representation, EFCA’s compulsory interest arbitration provisions for first contracts are finally getting the critical scrutiny that they deserve. On that score, EFCA is anything but free choice for either employees or employers. [IMGCAP(1)]In a recent article for Roll Call’s Mission Ahead, Thomas Kochan and Arnold Zack said that many of the arguments against EFCA’s first contract interest arbitration provisions could be easily fixed by setting forth the procedure for selecting the arbitrator and providing standards for arbitrators to follow in issuing binding awards. While adding such provisions would address some of the criticisms that have been leveled against EFCA, they would not overcome the fundamental public policy objections to mandating first contract interest arbitration.Although Kochan and Zack argue to the contrary, as someone who has been involved in more than 60 public-sector interest arbitration cases over the past 40 years, I emphatically disagree with the notion that EFCA first contract arbitration is either necessary or good public policy. But before getting to the heart of the matter, let me emphasize that I agree with their assessment of the critical role that mediation can play in the negotiation of first contracts. In my experience, however, where interest arbitration is mandated, mediation is, in most instances, doomed to failure. Instead, it becomes merely a weigh station on the road to arbitration.Kochan and Zack argue that compulsory arbitration of first contracts is necessary because a recent study found that newly certified unions under the National Labor Relations Act were able to secure first contracts within one year only 56 percent of time. Quite frankly, I am surprised that the percentage is anywhere near that high.Based on my experience in successfully negotiating more than 100 first contracts, it is relatively rare to complete such negotiations within one year for at least three reasons. First, it normally takes a union at least a couple of months or longer to put together its initial demands. Second, because unions typically make unrealistic promises during the organizing drive, it takes time for them to temper employee expectations, if in fact they are prepared to do so. Third, and most importantly, since the parties are negotiating a first contract, it is necessary to negotiate all the provisions normally found in a collective bargaining agreement, including seniority, management rights, grievance procedures, hours of work and overtime, leaves, as well as wages, insurance and other economic benefits. As a result, it is not at all unusual for such negotiations to take well over a year. Indeed, it is not unusual for such negotiations to take several years to conclude. Thus, I reject the premise that first contract arbitration is necessary because less than a majority of newly certified unions are able to negotiate their first contract in one year or less. As one police union representative recently commented to a Chicago area newspaper on the negotiation of a first contract that took 20 months, “Under two years for a first contract is actually very good.—Kochan and Zack then suggested that mandating first contract interest arbitration in the private sector is supported by the experience with compulsory interest arbitration in the public sector. While I disagree with their interpretation of this public-sector experience, it is important to point out that in almost all instances such legislation only covers employees who provide essential public services, such as police officers and firefighters, where strikes could have disastrous consequences. Thus, the principal rationale for mandating public-sector interest arbitration is, as the Illinois statute states, “to protect the public health and safety of the citizens …— This rationale is simply not applicable to employees covered by the NLRA.Even assuming that Kochan and Zack’s recommendations concerning the structure of first contract arbitration were accepted, EFCA’s compulsory arbitration provisions would still be a radical departure from the underlying premise of the NLRA, i.e., free collective bargaining. As the Supreme Court noted in a recent decision, “[t]he object of [the NLRA] was not to allow governmental regulation of the terms and conditions of employment, but rather to ensure that employers and their employees could work together to establish mutually satisfactory conditions.—EFCA’s compulsory arbitration provision is also a sharp departure from the long-held position of the AFL-CIO. For example, former AFL-CIO President George Meany stated that “compulsory arbitration … just will not work because it is an abrogation of freedom. The crucial difference between voluntary and compulsory arbitration is the difference between freedom and its denial.—The reason first contract interest arbitration is contrary to free collective bargaining is because it denies both employees and employers alike the right to say “no.— As Ted Kheel, one of the nation’s pre-eminent labor-management neutrals, observed in rejecting compulsory arbitration as a “panacea— for resolving collective bargaining disputes, “real bargaining … depends on the ability of the negotiators effectively to say no’ … .— Under EFCA, employees would have no right to ratify an arbitrated contract and employers would lose their right to say “no— to disputed union proposals. The right that employers currently have to reject costly or nonproductive union proposals would be lost. It is difficult to overemphasize how radical this change is. In an apparent effort to assuage Members of Congress who have expressed concerns over EFCA’s first contract compulsory arbitration provisions, Kochan and Zack rather cavalierly asserted that “the scope of issues to be considered would be limited to wages, hours and working conditions.— Surely they know, as do I, that the scope of bargaining under the NLRA is very broad and includes many issues that have significant policy ramifications, the resolution of which can vitally affect an employer’s ability to successfully compete in a global marketplace. In addition to wages and economic fringe benefits such as health insurance, unions are likely to advance to compulsory arbitration issues such as:• Restrictive work rules
• Mandatory employer participation in union pension plans, many of which are significantly underfunded
• Elimination of pay based on performance
• Prohibitions or limitations on subcontracting and/or the performance of bargaining unit work by non-union employees
• Promotions based solely on seniority or heavily weighted toward seniority as opposed to merit
• Union security provisions in states without right-to-work lawsAll of these issues are clearly mandatory subjects of bargaining. The attempt by Kochan and Zack to suggest that the scope of compulsory arbitration “would be limited— is, to put it gently, misleading in the extreme. While employers are legally obligated to negotiate over these issues, it is an entirely different matter to compel that such issues must be decided by arbitrators.In an economy where the only constant is the need for change, sometimes literally on a daily basis just to survive, the clearly predictable effects of compulsory arbitration of first contracts include the following:• Lengthy delays lasting up to a year or more between the commencement of arbitration and the issuance of an award, during which the time the employer will not be able to make necessary changes but instead will be required to maintain the status quo on all existing terms and conditions of employment.
• The fostering of a “one size fits all— mentality, thereby stifling an employer’s ability to innovate and respond to new circumstances.Even in the best of economic times, compulsory arbitration of first contracts poses serious risks to the economy. But for an economy in that is in dire straits and in desperate need of encouragement, it would be, in a word, disastrous.R. Theodore Clark Jr. is senior partner at Seyfarth Shaw LLP in Chicago.