Reclaiming Arbitration’s Good Name

Reclaiming Arbitration’s Good Name
Executive Summary
Arnold M. Zack
Labor and Worklife Program at Harvard Law School

For nearly a century labor arbitration, the voluntary agreement of unions and employers to give up wildcat strikes by jointly selecting a neutral to resolve issues of discipline as well as issues over the interpretation and application of their agreement, has provided workplace stability. However, the labor relations system in which that “labor peace” evolved is now undergoing radical change as the global economy with its facility for outsourcing of assembly tasks to other countries, its reliance on the digital world, and its shifting of markets has left us with fewer unionized workplaces, a drop in union membership and a reduced demand for and use of labor arbitration. This decline has been bolstered by unrelenting hostility toward unions by conservative employers resisting union organization while imposing compulsory, individual employment agreements upon workers in non-unionized enterprises which deprive their workers of the right to litigate statutory claims and effectively forestall their efforts to invoke the organizing rights guaranteed by the National Labor Relations Act (NLRA). These changes are occurring at a time when our economy is undergoing staggering alterations in the workplace and call into question whether existing laws and practices are sufficient to effectively handle the inevitable workplace disputes of the future. By  tracing these changes from the early expectations of a just system for resolving workplace dispute to the present era it is hoped we can salvage the those fragments that provided the workplace fairness that have been and hopefully will continue to be the basis of workplace equity  in dealing with the inevitable workplace  conflicts of the future  in our rapidly and radically changing world of work.

Institutionalizing Private Workplace Dispute Resolution Under Collective Bargaining

In 1935 the NLRA created a national labor policy encouraging collective bargaining and through subsequent Supreme Court decisions nurtured the development of a system of private arbitration, jointly funded by union and management to provide final and binding resolution of workplace disputes, while preserving the worker’s right to go to court to assure judicial protection of statutory workplace rights. Now, virtually  all collective bargaining agreements contain provisions for arbitration even though unionization has decreased. While 34% of the workforce had arbitration protection in 1954, outsourcing  and internationalization of production and commerce, changes in workplace structure, computerization and employer hostility to unionization have taken their toll on union membership. At present trade union membership in the United States is at 10.7%, while employers have exploited the good name of jointly crafted collective bargaining arbitration by imposing a soundalike procedure on individual employees in non-unionized enterprises.

Employer Controlled Arbitration in the non-unionized sector

This mandatory process also forces employees to surrender their right to statutory protection by requiring adherence to the employer created system as their sole source of protection and as a condition for hire or continued employment. Since the decision of Gilmer v. Interstate Johnson/Lane in 1991, the Supreme Court has been singularly committed to encouraging and empowering such systems, going so far in Epic Systems Corp v Lewis in  2018, as to hold that such individual employment contracts with their universal ban against class action preclude the invocation of NLRA protection of right of workers to form, join and assist in the creation of unions of their own choosing.

Seeking fair treatment for Workers in the new workplace

Society has always been pressed to assure fairness in the workplace.  In other industrialized nations that goal has been achieved by comprehensive legislation and government provided courts to assure resolution of any workplace disputes.

In the United States we have embraced a private approach to resolving such disputes.

The Due Process Protocol

In 1994 when employer promulgated arbitration for non-unionized employees first

appeared, the National Academy of Arbitration assembled leaders of the American Bar   Association, the American Civil Liberties Union, the Federal Mediation and Conciliation Service and the Society for Professionals in Dispute Resolution to develop a code to assure fairness in such employer promulgated systems. Now more than 25 years later, in an era of such dramatic changes in our workplaces and work lives, it is time to reexamine the Protocol to assure that employer mandated arbitration structures assure workers of true due process and hopefully statutory protection as well.  There are many newly arising questions to be addressed. Could there be access to protective legal recourse? Could the ban on class actions be lifted? Is there a way to avoid the “reuser tilt” by providing single selection, rotation of arbitrators, or a fixed term of employment, or third party funding?

A reconvened Task Force, perhaps with players more attuned to the workplace of the future, dedicated to assure workplace fairness to protect worker voice in the new workplace and addressing some of the challenges to the structure may enable the  plotting of a new  map for individual employees who feel the need to effectively challenge whatever action is taken to undercut their rights under law and workplace rules, regulation and/or contract. The pressure for changes to our workplaces is mounting, and the experiments for changes are all around us. Throughout it all the vital constant that must be recognized and bolstered is the need for assuring there is machinery in place to provide workers of the future a set of tools that will assure they make their just contribution to the new economy and that their right to workplace fairness is not sacrificed in the tumult of change.

The full article is available here. The article is reprinted Reprinted with permission of the American Arbitration Association® and Juris Publishing, all rights reserved.