An Overview of Labor Arbitration

By Lee Hornberger,
Arbitrator and Mediator

Introduction

This article provides an overview of labor arbitration under collective bargaining agreements.

Major features of labor arbitration

Labor arbitration is a positive alternative to industrial strife, strikes, and work stoppages. Labor arbitration is the result of collective bargaining.

In labor arbitration, the labor union advocate represents the union rather than the employee. The union is the party rather than the employee. The grievance belongs to the union. The advantages with the union being a party includes a balance of power between the union and the employer, greater experience with labor disputes, and an ongoing relationship between the union and the employer. The arbitrator looks at the collective bargaining agreement (CBA) and the common law of the shop.

Law applicable to labor arbitration

The law applicable to private sector labor arbitration derives from the 1960 U.S. Supreme Court Trilogy.[1] The Trilogy held that the parties are to submit all grievances to arbitration, not merely those that a court deems meritorious. The Trilogy held that processing even frivolous claims may have therapeutic values in the workplace. The labor arbitrator’s source of law is not confined to the express provisions of the CBA, as industrial common law is equally part of the CBA although not expressed in it.

The Michigan Supreme Court followed the Trilogy in Kaleva-Norman-Dickson Sch Dist No 6 v Kaleva-Norman-Dickson Sch Teachers’ Ass’n,[2] and Port Huron Area Sch Dist v Port Huron Ed Ass’n.[3]

The applicability of the Michigan Uniform Arbitration Act (MUAA)[4] to the review of Michigan public sector labor award awards has not been decided.[5]

The Code of Professional Responsibility for Arbitrators of Labor-Management Disputes (Code) is the professional code for labor arbitrators.[6] The Code has been approved by the American Arbitration Association (AAA), National Academy of Arbitrators, and Federal Mediation and Conciliation Service (FMCS).

Three of the major treatises for labor arbitration are Elkouri & Elkouri, How Arbitration Works (8^th ed. 2016); Abrams, Inside Arbitration (2013); and St. Antoine, The Common Law of the Workplace (2d ed. 2005).

Servicing agencies and arbitrator selection

Typically, the employer and the union select an arbitrator from a list that they obtain from a servicing/administering agency. Three national servicing agencies are the American Arbitration Association,[7] the Labor Relations Connection (LRC),[8] and the FMCS.[9] At the state level, there is the Michigan Employment Relations Commission (MERC).[10] In addition, parties can select an arbitrator ad hoc or by having the arbitrator named in the CBA.

Arbitrator neutrality is crucial. Labor arbitrators on FMCS and AAA labor panels cannot serve as advocates for either labor or management. Such arbitrators may still be law professors, neutrals, mediators, or in some cases practice law in other fields, just not as representatives of unions or management in labor relations matters.[11]

Labor arbitrators are generally not required to make extensive disclosures of prior relationships.[12]

LRC Labor Arbitration Rule 10 indicates,

Arbitrators must immediately disclose to The Labor Relations Connection any situation likely to affect impartiality, including any bias. Upon notification from the Arbitrator or any other individual, the parties will be contacted with this information. If a party objects to the Arbitrator remaining on the case, the Labor Relations Connection will consult with the parties and the Arbitrator to determine whether the Arbitrator should be disqualified and shall inform the parties of the decision.[13]

In labor arbitration, the prospective arbitrator should make appropriate disclosures during the selection process. After selection, there is a continuing duty to disclose.[14]

The Code indicates,

Before accepting an appointment, an arbitrator must disclose … any current or past managerial, representational, or consultative relationship with any company or union involved in a proceeding in which the arbitrator is being considered for appointment or has been tentatively designated to serve. Disclosure must also be made of any pertinent pecuniary interest.[15]

In labor arbitration, any party may be represented by counsel or other authorized representative. AAA Labor Arbitration Rule 18.[16]

Evidence rules in labor arbitration

The evidence rules in labor arbitration are not as strict as those in employment arbitration or court litigation.

AAA Labor Arbitration Rule 27 indicates:

The arbitrator shall determine the admissibility, the relevance, and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant and conformity to legal rules of evidence shall not be necessary.

LRC Rule 16 indicates,

Exhibits may be submitted to the Arbitrator as evidence during the hearing process. … The Arbitrator has the sole discretion to determine the order of proceedings. The parties will be given the opportunity to present relevant proofs. The parties may provide any evidence relevant to the dispute and shall provide any additional material required by the Arbitrator. The Arbitrator will determine the admissibility of evidence and the manner in which it is presented.

The arbitrator may conduct the arbitration in a manner that the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding. The authority conferred on the arbitrator includes the power to determine admissibility, relevance, materiality, and weight of the evidence.[17]

Under the MUAA, an award can be vacated where the arbitrator refused to consider evidence material to the controversy.[18]

Discovery and information gathering in labor arbitration

Formal discovery in labor arbitration is not as robust as in employment arbitration. There are generally no depositions or interrogatories in labor arbitration.[19] This can help make the process more streamlined and expeditious.

The grievance procedure in the CBA provides an opportunity for information gathering. The parties should utilize the grievance procedure with the goal of sharing relevant information. The employer has a general obligation to provide information needed by the union for the performance of its duties during the term of a CBA. NLRB v Acme Industrial Co[20] (“Arbitration can function properly only if the grievance procedures leading to it can sift out unmeritorious claims.”).[21]

Burden of proof in labor arbitration

The Employer has the burden of proof in a discipline case.[22] Depending on what the discipline is for, the burden of proof could be by the preponderance of the evidence, clear and convincing, or beyond a reasonable doubt. It might not be self-evident as to which party has the burden of proof in situations such as a voluntary quit or a non-disciplinary demotion.

In a contract interpretation case, the union has the burden of proof.[23]

Conducting a successful labor arbitration

Code, Part 1, Section A, indicates,

Essential personal qualifications of an arbitrator include honesty, integrity, impartiality and general competence in labor relations matters.

There should not be ex parte contacts between the parties and the arbitrator. “Copies of any prehearing correspondence between the arbitrator and either party must be made available to both parties.”[24] This can create a tension when there is a request for a signed subpoena from an arbitrator. Some arbitrators will entertain an ex parte request for a signed subpoena. Others will not.

Professionalism and integrity are crucial.[25] Listening is important.

LRC Rule 31 provides,

The National Academy of Arbitrators’ Code of Professional Responsibility for Arbitrators of Labor-Management Disputes is incorporated by reference and Arbitrators selected through The Labor Relations Connection are subject to this Code.

The advocates should carefully prepare for the hearing. This includes understanding the case, helping to draft the issue language,[26] and presenting an appropriate opening statement. There will be examination of witnesses. There will be closing arguments or post-hearing briefs.[27] The award is usually due 30 or 60 days after the arbitrator receives the last filed brief.

Audience of a labor arbitration award

The labor arbitration award is written for a number of audiences. The award should address all the arguments made by the losing side. The award should decide the issues raised by the parties. The award should tell the losing party why it lost.[28] The award is also written with the grievant and the workforce in mind. Other potential audiences are the human resource office and management. If the award is to be published (such as in BNA or CCH), the profession, other arbitrators, and future readers become potential audiences. Permission of the parties is needed to publish an award.[29]

The Code indicates,

When an opinion is required, factors to be considered by an arbitrator include: desirability of brevity, consistent with the nature of the case and any expressed desires of the parties; need to use a style and form that is understandable to responsible representatives of the parties, to the grievant and supervisors, and to others in the collective bargaining relationship; necessity of meeting the significant issues; forthrightness to an extent not harmful to the relationship of the parties; and avoidance of gratuitous advice or discourse not essential to disposition of the issues.[30]

The arbitrator can retain remedial jurisdiction over the case after the issuance of the award for the purpose of resolving questions that may arise over application or interpretation of a remedy.[31] “It is widely accepted that an arbitrator may properly retain jurisdiction to resolve remedial problems that may arise in complying with the award.”[32]

Conclusion

For more than 65 years the U.S. Supreme Court Trilogy has provided a successful process for doing labor-management arbitrations. Hopefully that will continue into the future.

__________________

Lee Hornberger is a member of the National Academy of Arbitrators. He is a Diplomate Member of The National Academy of Distinguished Neutrals He is a former Chair of the Alternative Dispute Resolution Section of the State Bar of Michigan, Editor Emeritus of The Michigan Dispute Resolution Journal, former member of the State Bar’s Representative Assembly, former President of the Grand Traverse-Leelanau-Antrim Bar Association, and former Chair of the Traverse City Human Rights Commission. He is a member of the Professional Resolution Experts of Michigan (PREMi), an invitation-only group of Michigan’s top mediators. He is a Fellow of the American Bar Foundation and a Fellow of the Michigan State Bar Foundation.

He has received the Distinguished Service Award from the State Bar’s ADR Section in recognition of significant contributions to the field of dispute resolution. He has received the George Bashara Award from the ADR Section in recognition of exemplary service. He has received Hero of ADR Awards from the ADR Section. He is in The Best Lawyers of America 2020-__ for arbitration and mediation. He received a First Tier ranking in Northern Michigan for Mediation by U.S. News – Best Lawyers® Best Law Firms in 2022-__; and a Second Tier ranking in Northern Michigan for Arbitration by U.S. News – Best Lawyers® Best Law Firms in 2022-__ . He is on the 2016-__ Michigan Super Lawyers lists for alternative dispute resolution.

He holds his B.A. and J.D. cum laude from the University of Michigan and his LL.M. in Labor Law from Wayne State University.

His website is https://www.leehornberger.com/

[1] United Steelworkers v American Mfg Co, 363 US 564 (1960); United Steelworkers v Warrior & Gulf Navigation Co, 363 US 574 (1960); and United Steelworkers v Enterprise Wheel & Car Corp, 363 US 593 (1960).

[2] 393 Mich 583 (1975).

[3] 426 Mich 143 (1986).

[4] MCL 691.1681 et seq.

[5] Michigan AFSCME Council 25 v Wayne Co,___ Mich App ___, 5 NW3d 333, MSC 164435 and 164436 (May 3, 2024), lv den Michigan AFSCME Council 25 v. Wayne Co., COA 356320 and 356322 (April 21, 2022). Lichon v Morse, 507 Mich 424 (2021), stated, “… in the context of [CBA]s, we [have] held that it was appropriate to apply United States Supreme Court precedent regarding the National Labor Relations Act (NLRA) … to contracts entered into under the state’s public employment relations act … .” Id. at 467-468.

[6] The Code is at: https://www.fmcs.gov/services/arbitration/arbitrator-code-professional-responsibility/ . St. Antoine, The Common Law of the Workplace (2d ed. 2005), pp 5-6.

[7] The AAA website is at: https://www.adr.org/

[8] The LRC website is at: https://www.the-lrc.com/

[9] The FMCS website is at: https://www.fmcs.gov/

[10] The MERC website is at: https://www.michigan.gov/leo/bureaus-agencies/ber/michigan-employment-relations-commission

[11] 29 CFR 1404.5. Code, Part 1, Section A.

[12] Code, Part 2, Section B.

[13] The LRC Labor Arbitration Rules are at: https://www.the-lrc.com/labor-arbitration-rules/

[14] AAA Labor Rule 15. St. Antoine, p. 9.

[15] Code, Part 2, Section B.

[16] The AAA Labor Arbitration Rules are at: https://uat.adr.org/sites/default/files/Labor_Arbitration_Rules_Including_Expedited_Labor_Arbitration_Rules.pdf . St Antoine, p. 21.

[17] MUAA MCL 691.1695.