Labor relations: dispute resolution

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Conflict, Grievance & Dispute Resolution


Questions:

Discussion  One: 

Based on the readings, and from the employer perspective, what are the pros and cons of using mediation, arbitration, and conciliation? 

Be sure to provide the references for the sources of the information you used including the material provided in the classroom.

Discussion Two: 

Review the following attachments (If you can’t open these documents, please see the attached documents. They are added there)


Appealing a Performance Appraisal


Handling a Performance Appraisal

Explain which one you think gives better advice. Support your opinion with at least two sources from the class materials.

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Module 3: Living under a Collective

Bargaining Agreement (CBA)

Topics

1. The Grievance Procedure
2. Labor Arbitration

The Grievance Procedure

Typically, labor contracts have multiyear terms, three years being the most popular length. The

longer the term, the more important it is that the parties carefully craft contract provisions for

maintaining a lasting, peaceful, and productive relationship. Provisions vary widely from

industry to industry and contract to contract. However, one feature contained in virtually all

CBAs is a negotiated grievance procedure. This procedure provides a mechanism for resolving

employee grievances and disputes over the interpretation or application of the CBA or both and

is central to creating and preserving the stability of the parties’ relationship during the term of the

contract.

Grievance procedures are not confined to unionized organizations. In recent years, they have

gained popularity with an increasing number of nonunion employers. Many progressive

organizations without union relationships have voluntarily adopted employee grievance

procedures as a means for the orderly resolution of workplace disputes.

The grievance procedure serves a number of important purposes. Its most fundamental purpose is

to resolve misunderstandings over the precise meaning of the contract. When the parties

negotiate their CBA, they simply cannot anticipate every problem or scenario that may arise

during the life of the agreement. In addition, a critical part of the union’s institutional role is to

promote employee job security and assure that work rules are applied fairly and that the

employer’s disciplinary actions are fully supported. Some disagreements inevitably will arise

over the underlying decision to discipline a member of the bargaining unit or whether the

specific action being proposed, e.g., suspension or termination, is appropriate under the

circumstances.

Negotiated grievance procedures also play a crucial role from the broader perspective of society

at large. Labor disputes lead to lost wages and productivity. In extreme cases, they can

undermine the health of an industry or the nation’s economy. The stakes for our national welfare

are quite high in encouraging the prompt, peaceful, and voluntary resolution of workplace

disputes. The unpleasant alternative is unbridled conflict and the potential for disruption to the

health of our economy.

Most, if not all, comprehensive labor contracts contain a detailed procedure for resolving

employee grievances, as well as those of the union itself and, much less often, management. A

grievance procedure has the obvious benefits of minimizing disruption and controlling costs. The

prompt and efficient resolution of grievances through established procedures pays dividends for

employees, the union, and management alike.

Common Features of Grievance Procedures

Grievance procedures take a multitude of forms, but most share two common features. First,

virtually all negotiated grievance procedures contain steps, that is, a hierarchical system for

elevating unresolved issues. For example, at step 1 of the procedure a grievance may simply be

an oral statement of a problem during an informal discussion among the employee, the union

steward, and the employee’s supervisor. The discussion may involve something as

straightforward as a problem with the employee’s paycheck or an assertion that the employee

was improperly denied an opportunity to work overtime.

If the issue cannot be informally resolved at step 1, it may be elevated to step 2. Step 2 is a

slightly more formal step in the grievance hierarchy. It would not be unusual for the CBA to

require that the grievance be committed to writing at step 2. The discussion at step 2 often

involves a higher level of supervision, e.g., the employee and his or her union representative.

Someone from the organization’s human resources staff is often involved at the higher steps.

In addition to containing hierarchical steps, most grievance procedures also contain specified

time limits for filing and responding to grievances. For example, the procedure will indicate a

specific number of days within which the employee or union representative must surface the

underlying problem—the basis for the grievance. The purpose of such time limits is to avoid

“staleness,” i.e., the expending of energy on matters that are no longer fresh in everyone’s mind.

Once a grievance has been filed, the process is likely to specify a time limit within which

management must respond. After a grievance is filed, many CBAs provide that management

must state its position within 10, 15, or 20 days, indicating whether it agrees or disagrees with

the grievance, whether it is willing to resolve the matter, and so on.

For the union, the grievance procedure provides an essential mechanism for fulfilling its legal

duty to represent fairly all members of the bargaining unit. For management, it provides a

“bottom-up” avenue for communicating with its workforce, yielding valuable insight into

employee problems and concerns.

Grievance Procedure Schematic

Step Description
Individuals Who May Be

Involved

1
Informal; oral

statement

Employee, immediate

supervisor, and steward

2

More formal;

written statement of

basis of grievance

Employee, second-level

supervisor, and steward

3

More formal; may

require written

management

response

Employee, group/division

manager, steward, and

human resources

representative

Grievance-Evaluation Process

As grievances are evaluated through the procedural steps, the parties have ample time and

opportunity to engage each other on the issues. In most instances, they will resolve the issues

through dialogue, problem-solving techniques, and informal negotiation before an arbitration

award is imposed. This process has the additional advantage of forestalling or eliminating similar

disputes that might have arisen in the future.

Even the most effective grievance procedure cannot completely eliminate conflict in the

workplace. There will inevitably be conflicts and disagreements. Perhaps the major strength of

the procedure is its ability to channel and institutionalize conflict and to provide a structured

safety valve for problems arising in the workplace.

Finally, the grievance evaluation process helps the parties reach understandings and agreements

that become adjuncts to the basic negotiated agreement. The accumulated body of grievance

resolutions and decisions injects an element of flexibility in the parties’ relationship. Eventually,

when the contract expires and is renegotiated, both parties have not only shed some of their

“baggage” of unresolved issues but also have a useful record of concerns that may have to be

addressed in a successor contract.

Topic 1 Self-Assessment Questions

Please go to My Tools > Self Assessments > to complete this self assessment.

2. Labor Arbitration

In this section, we examine the purpose, nature, and scope of the arbitration process. Arbitration

is the final step in the process of resolving grievances. Unlike judges, who apply legal precedents

in deciding cases, arbitrators must deal with the unique features of individual CBAs. They also

apply something called the “common law of the shop.” These are not written laws or case

decisions. Rather they are norms, standards, and principles that have evolved over several

decades of arbitration practice. They have gained wide acceptance as a means to resolve union-

management disagreements.

Arbitrators are unique in regards to the source of their power and authority. They are empowered

by the parties themselves, via the arbitration article in their CBAs. Such key matters as the

selection and payment of arbitrators as well as the limits of their authority will normally be

established in the parties’ written agreement.

Arbitration is a quasi-judicial process. In most union-management relationships, it is used

infrequently and is reserved for those disputes that the parties find intractable. In addition to

resolving day-to-day disagreements as to the meaning and interpretation of the CBA, arbitrators

also play a crucial role in employee discipline cases. One of the most frequent issues referred to

arbitrators is the determination of whether a specific disciplinary action is justified and fully

supported by the evidence and surrounding circumstances.

Only the union, not the individual worker, can refer a case to arbitration. This system places

important power in the hands of the union and less in the hands of individual employees.

However, the “check and balance” on this union prerogative is its so called duty of fair

representation (DFR). Under the legal principle of DFR, the union is free to make fact-based

decisions about which cases it will pursue within the grievance-arbitration procedures and which

it will not. A union is not required to pursue every case its members may surface. On the other

hand, in choosing whether to take on a case, or how vigorously to pursue it, the union’s actions

may not be based upon discriminatory considerations. Individual employees have a basis for

legal action against the union if it carries out its representational responsibilities in a

discriminatory or haphazard fashion.

Background

Arbitration as a means of conflict resolution gained popularity in the United States only after

World War II. A pivotal Supreme Court decision in 1960, known as the Steelworkers’ Trilogy,

brought added credibility and stature to the process. Essentially, the Court recognized the unique

expertise of arbitrators and encouraged the use of arbitration to resolve labor disagreements. In

addition, the justices deemphasized the role of the courts in day-to-day union-management

relations, ruling that judges had no business weighing the merits of individual grievances.

Issues in Arbitration

The issues and concerns that are referred to labor arbitrators fall into two broad categories:

contract-interpretation disputes and disciplinary cases. Regarding the former, commentators have

repeated the tongue-in-cheek adage that a new CBA results in three separate agreements―(1) the

one the union thinks exists, (2) the one management thinks exists, and (3) the one the arbitrator

tells you exists. This adage conveys the reality that after many months of bargaining, the parties

have made numerous compromises and accommodations.

The language that ultimately appears in the CBA is often less than clear. What did union and

management negotiators mean when they stated that employees normally would not be required

to work Saturday overtime? How about a pledge that workers would not be penalized for

occasional tardiness in arriving at work in the morning?

The second broad category of cases referred to arbitrators involves disciplinary actions against

employees. For example, was a five-day suspension for failing to call in sick, justified? If an

employee is repeatedly rude to customers or coworkers, does this provide a sound basis to

discharge the employee? What about theft of company property? Or what about

insubordination, when an employee refuses to carry out an assigned task or job duty?

Unfortunately, these are all situations that arise in the modern workplace.

Although management retains the right to maintain order in the workplace and to impose

appropriate discipline, most CBAs permit the union to file grievances challenging disciplinary

actions. In instances where no accommodation can be reached, the ultimate question of whether a

disciplinary action was fair, just, and supported by the evidence may be decided through an

arbitration hearing.

Arbitrator Selection

The parties use several different methods to select arbitrators. At the national level, a small

federal agency, the Federal Mediation and Conciliation Services (FMCS), and the American

Arbitration Association (AAA) maintain rosters of qualified arbitrators. In response to a request

from the parties to a grievance or other dispute, these organizations will supply a roster of

qualified arbitrators from which to choose. The FMCS and the AAA also provide educational

materials and training opportunities for arbitrators, and have jointly published a code of ethical

conduct applicable to professionals working in the field of dispute resolution.

Some CBAs do not provide for arbitrator selection through the procedures of the FMCS or AAA.

Some parties agree to establish a permanent panel of arbitrators, and upcoming cases are simply

assigned to panel members on a rotating basis. Rarer still, are contracts that designate a

permanent arbitrator. In these arrangements, a designated individual assumes a permanent role in

hearing and deciding all cases for the duration of the contract.

Arbitrators come from a variety of backgrounds. More and more individuals entering the field

have training in the law. However, many arbitrators have specialized training or experience in

industrial relations or come from the academic community. Increasing numbers of women and

minorities are opening successful arbitration practices. The AAA, a nonprofit organization based

in Washington, D.C., provides education and training for arbitrators and publishes a code of

ethical conduct applicable to professionals working in the field.

Arbitration Procedures

In addition to selection procedures, most contracts also specify the way the arbitrator will be

compensated. Typically, the two sides agree to share equally in the arbitrator’s fees and expenses.

The arbitration article of the contract may also address such questions as (1) how quickly the

arbitrator must issue his or her award and (2) whether the award must be in written form.

In some instances, the contract will indicate the level of formality the parties anticipate. At one

extreme, an arbitration hearing may entail formal examination and cross-examination of

witnesses and be conducted in a fashion very similar to an appearance in court. Other arbitrations

are conducted around a conference table, employing a more conversational format. In either case,

the rules governing the introduction of evidence are more relaxed than in court. The arbitrator, at

his or her discretion, may admit hearsay testimony, documents, or physical evidence that would

not meet the standards for introduction in a court proceeding.

Arbitration Awards

Most contracts require that the arbitrator commit to writing his or her decision in the case. In

weighing the facts presented, the arbitrator will first focus upon the wording of the parties’

agreement. What does it mean that employees will be subject to progressive discipline? What

did the union and company management intend when they agreed that “overtime will be

distributed on a fair and equitable basis?”

The arbitrator is also free to consider other factors in reaching a fair resolution. Did the parties

have an established practice for dealing with similar situations in the past? Is there a common or

widely accepted manner of handling similar situations within the industry where the parties

operate? While weighing all of these factors, the arbitrator’s primary concern will be to enforce

the parties’ intent, attempting to determine what outcome they had in mind when they crafted the

language in their CBA.

232

9

IMPASSE RESOLUTION

When labor and management fail to reach agreement on a labor contract through
a negotiated settlement, they may turn to a procedural technique to resolve the
impasse . This chapter, which covers issues in the middle (functional) level of
Figure 1.1 , describes various dispute resolution techniques, shows how these
techniques affect the negotiations process, and assesses how well the techniques
perform in settling impasses.

The chapter fi rst describes mediation, a process by which a third party tries to
lead labor and management to a negotiated settlement through improving com-
munication and making recommendations. The discussion then turns to fact
fi nding, a more constraining procedure in which the third party makes their
recommendations in a formal report. The next dispute procedure we consider is
interest arbitration, where the parties are constrained to adhere to the decision
of an arbitrator. 1

As with other aspects of collective bargaining, new techniques and roles are
emerging in the area of dispute resolution. Some mediators are now using interest-
based techniques to facilitate labor-management negotiations. These techniques
are consistent with the principles of interested-based bargaining (described in
Chapter 8 ). We will describe this approach and contrast it to the mediation of
more traditional negotiations. This chapter fi nishes by discussing how new third-
party roles are emerging to better respond to the environmental pressures that
the parties confront and to improve labor-management relations.

MEDIATION

Mediation is the most widely used type of third-party intervention in collective
bargaining. In mediation, a neutral party helps union and management negotiators
reach a labor agreement. A mediator has no power to impose a settlement. Instead,
he or she acts as a facilitator for the bargaining parties.

Dispute Resolution Procedures

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Dispute Resolution Procedures 233

Mediators keep the parties talking, they carry messages between the parties,
and they make suggestions. Mediators must rely on persuasion and their com-
munication skills to convince the parties to reach a voluntary agreement. A
mediator ’ s power is limited by the fact that he or she is an invited guest; either
side can ask a mediator to leave.

The Federal Mediation and Conciliation Service

The National Labor Relations Act specifi es that the party proposing changes in
a contract (usually the union) must notify the Federal Mediation and Concili-
ation Service (FMCS) at least thirty days before the start of a strike. While the
law does not require the parties to use mediation if they reach an impasse,
the FMCS includes a staff of experienced mediators who are always ready to
assist the negotiating parties if they are invited to do so. Most states have state
mediation and conciliation agencies that also make mediators available to
negotiating parties. Both federal and state mediators are typically available free of
charge.

The FMCS, the U.S. secretary of labor, other members of the president ’ s
cabinet, or the president is sometimes brought into the mediation process in
important disputes or disputes that designated as national emergencies as defi ned
by Title II of the Taft-Hartley Act. Mediation also is frequently used in hospital
collective bargaining. The 1974 amendments to the NLRA, which extended the
act ’ s coverage to private, nonprofi t hospitals, specify that in those hospitals, mediation
has to take place before a legal strike can occur.

Mediation under the Railway Labor Act

The Railway Labor Act contains provisions for a mediation phase before a dispute
can go to the next step of the impasse process. The staff mediators of the National
Mediation Board, the administrative agency for the Railway Labor Act, serve as
mediators in bargaining that takes place under the coverage of the Railway Labor
Act.

Mediation in the Public Sector

Mediation is more commonly used in the public sector than in the private
sector. Almost all of the bargaining statutes that cover state and local government
employees call for mediation as the fi rst phase of the impasse resolution process.
In the state of New York, for example, on average, about 30 percent of all
public sector negotiations reach an impasse and required mediation. Other states
have reported somewhat lower rates of reliance on mediation, but all states
report rates that exceed the average the FMCS reported reports for the private
sector.

In the public sector, staff mediators are employed by the various state agencies
that administer the public employment bargaining statutes. In some states, mediation
is the province of ad hoc, part-time mediators. These ad hoc mediators generally
hold full-time posts as college professors, lawyers, or members of the clergy or
in some occupation related to labor-management relations.

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234 Part III. The Functional Level of Labor Relations

Types of Disputes That Can Be Settled by Mediation

Mediation is most successful in addressing confl icts that arise from poor com-
munication and misunderstandings that take place when one party or both parties
become overcommitted to their bargaining positions or because of a lack of
experience on the part of the negotiators. Mediation is least successful in resolving
confl icts caused by the economic context of the dispute, such as the employer ’ s
inability to pay or major differences in the parties’ expectations.

Where there is a wide divergence in the demands of labor and management,
the mediation process is limited because some form of outside pressure is necessary
to induce the parties to make major changes in their bottom-line positions. Thus,
the mediation process is best suited to helping the parties move marginally beyond
their initial positions. Only in conjunction with some external pressure can
mediation be expected to succeed in getting the parties to adjust their bottom
lines and reach agreement when a large gap exists between them.

Disputes that arise from of intraorganizational confl icts are also diffi cult to
resolve through mediation. Consider again the example of the teacher dispute
described in Box 8.1 , which involved major internal confl icts within a school
board ’ s management. In that case, one mediation session was held before the
internal split was resolved but little progress was made. After the session ended,
the mediator was informed that the superintendent was going to try to get the
board negotiator dismissed. For the next two months, an internal power struggle
ensued. The mediator kept in touch by telephone with all the parties, but no
formal mediation session took place until the superintendent emerged as the victor
of the internal battle and the board negotiator was replaced. Obviously, the
mediator in this case had to walk a fi ne line in trying to convince management
to resolve its internal confl icts so that negotiations could proceed.

The less the mediator becomes involved in trying to mediate disputes in one
of the parties’ organizations, the greater the likelihood that the mediator will be
accepted by both parties and the more open the parties will be to the mediator.
The diffi culty for mediators is that a failure to resolve this sort of internal dispute
can make it impossible to resolve the union-management dispute.

WHAT MEDIATORS DO

The ultimate objective of a mediator is to help the bargaining parties reach a
settlement. Yet there is more to mediation than the fi nal step that settles the
contract. Mediation follows a continuously narrowing course as the mediator
seeks to whittle away at the various issues in the dispute. Progress toward a settle-
ment is sometimes possible without necessarily completely resolving any of the
issues. In other words, progress has been made if the parties have succeeded in
narrowing their differences over the open issues.

Mediation is also a device designed to help the parties “come clean without
prejudice”—that is, to explore informally or off the record what would happen
if they were to move away from their bottom-line positions. Mediators commonly
undertake this exploratory effort to prevent the parties from miscalculating. Thus,

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Dispute Resolution Procedures 235

one major function of mediation is to allow informal bargaining to take place,
either directly between the parties or indirectly when both parties share confi dential
bargaining information with the mediator. 2

Mediators also try to prevent the parties from holding back information about
which concessions they are willing to make to avoid a strike in tripartite meetings.
It is by no means an easy task for a mediator to identify where the point of
resistance is for the parties, since in most instances negotiators are extremely wary
about sharing this information openly with a mediator. Instead, mediators must
guess at the parties’ positions from the statements they make and then try to get
the parties to put their best offer on the table.

What mediators do is infl uenced by whether the parties use traditional or
interest-based strategies in negotiations. When negotiators use interest-based
techniques, they expect mediators to be skilled facilitators of this type of process.
Mediators must be good at generating options through brainstorming and at
knowing when to suggest that negotiators form subcommittee or use some other
device for gathering additional information. They must also be able to offer
suggestions that are more than simple compromises of existing positions—mediators
must help invent new options that satisfy the interests of both parties. Most of
all, mediators need to watch for statements or actions by one party or the other
that might indicate that the process is reverting to traditional positional bargaining
and coach the parties about how to avoid this tendency. Finally, mediators must
also be skilled teachers of these new approaches to negotiations and must have a
keen sense of when to recommend that parties try interest-based techniques. This
must be done well before the start of a negotiations process since, as we indicated
in Chapter 8 , most negotiators need to be trained in these techniques before they
can use them successfully in actual bargaining.

The Traits of Successful Mediators

What are the traits of a good mediator? Perhaps the most critical requirement is
that the mediator be viewed as trustworthy by the parties. Because this type of
intervention is voluntary, no mediator can function well without the trust of the
parties.

Trustworthiness is also important because the mediator must obtain confi dential
bargaining information from the parties. If this information is used indiscriminately,
it could destroy a party ’ s bargaining strategy. Although trust can be achieved by
reputation, most experienced negotiators will be hesitant to divulge confi dential
bargaining information merely because the mediator has a good reputation. Thus,
the early stages of most mediation efforts (when the mediator is not personally
known to the parties) is often taken up with the mediator ’ s attempts to establish
his or her trustworthiness

Trust can be lost as the process unfolds. When this occurs, a mediator may
voluntarily withdraw from the case or the parties may seek other way of resolving
the dispute.

The litany of desirable mediator traits often reads like a modifi ed Boy or Girl
Scout oath: A good mediator is trustworthy, helpful, friendly, intelligent, funny,

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236 Part III. The Functional Level of Labor Relations

and knowledgeable about the substantive issues in question. Evidence suggests
that nothing substitutes for experience as a quality that helps a mediator gain the
trust of negotiators and in other ways promotes successful mediation. Mediation
is an art that one must learn by trial and error through on-the-job training.

THE DYNAMICS OF MEDIATION IN
TRADITIONAL BARGAINING

Mediation and the strategies of a mediator in a traditional bargaining process
often proceed through a cycle of different stages. 3

The Initial Stage: Gaining Trust

During the initial stages of mediation, the mediator is primarily concerned with
gaining the trust of the parties and identifying the issues in the dispute, the
emotional climate between the parties, and the distribution of power on each
negotiating team. During the initial stages of mediation, the role of the mediator
is to ask questions and listen. Normally the mediator will shuttle between the
two negotiating teams to explore issues. Separate sessions with the mediator also
give the parties an outlet for their pent-up emotions and frustrations.

In these stages the parties will often lash out at each other, exaggerate their
differences, and try to convince the mediator of their own rationality and the
unreasonableness of their opponent. It is in these early sessions that bonds of trust
and credibility can be established between the mediator and the parties.

In short, in the early stage of mediation the parties are testing the mediator.
Some of the same grandstanding that occurs in the early stages of the negotiating
cycle is repeated at this point in mediation for the benefi t of the newest entrant
into the process.

The biggest challenges for the mediator at this stage are (1) to accurately
diagnose the nature of the dispute and the obstacles to a settlement; and (2) to
get something started that will produce movement toward a fi nal resolution. The
mediator often hears from one party that “we made the last move, so the next
move is up to them,” only to proceed to the other side and hear the same thing.
The mediator cannot let either party ’ s hesitance to move fi rst halt the process
before it is given a chance. Neither party, in all likelihood, wants this to happen,
or the mediator would not have been called in the fi rst place.

The Middle Stage: Probing for Potential Compromises

Once the mediator overcomes this stalemate, the next step is to begin an exchange
of proposals and test for potential areas of compromise. At this point, it is crucial
that the mediator ’ s diagnosis of the underlying sources of confl ict is accurate.
The mediator is now beginning to intervene more actively by trying to establish
a framework for moving toward a settlement. If the mediator has misjudged the
underlying diffi culties and tries to push the parties toward a settlement prematurely
or in a way that does not overcome some of the major obstacles, his or her
credibility can be lost.

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Dispute Resolution Procedures 237

During this second stage of the mediation process, the mediator continues to
ask questions to identify the priorities and bottom-line positions of the two parties.
The mediator actively probes for possible acceptable solutions to the outstanding
issues. Once the parties have begun to discuss specifi c proposals, the mediator
attempts to determine whether their bottom-line positions are close enough. If
they are, then the mediator presses for modifi cations that would yield an
agreement.

The mediator ’ s ability to estimate the parties’ bottom-line positions is crucial
at this stage, as is the timing. When the mediator judges the bottom-line positions
to be close enough to push toward a settlement, he or she takes a more assertive
role. The mediator can suggest compromises, push the parties to make compromises
that they earlier stated they would be unwilling to make, and, in general, try to
close the gap between the parties. Engaging in such active tactics prematurely
(that is, when the parties are still too far apart) will damage the mediator ’ s credibility
and acceptability.

When conditions are not right for settlement, the mediator must hold back
from overly aggressive tactics. When the situation is ripe, however, the mediator
must take action or risk losing the opportunity to forge a settlement. The mediator ’ s
prior experience helps guide him or her in judging timing. At this point in the
process, the art element of mediation comes to the fore.

The Final Stage: The Push to Compromise

As the pressure to reach a settlement builds and the mediator senses that the time
for the fi nal push toward resolution is at hand, the mediator becomes more
aggressive. No longer passively listening to the parties’ arguments and rationaliza-
tions, the mediator tries to get the parties to face reality and adjust their expectations.
The mediator may push compromise solutions while at the same time being
careful to avoid becoming identifi ed with a specifi c settlement point.

Overidentifi cation with a solution that one or both party rejects can limit the
continued usefulness of the mediator. Thus, any compromises the mediator proposes
must be presented as merely recommendations.

The dynamics in each of the negotiating teams often change at this point as
well. Frequently, team members will differ on the substantive issues. The mediator
will often look to the professional negotiators on each team for help in dealing
with the more militant team members. Sometimes the reverse is true: the negotiator
will look to the mediator for help in calming a militant faction on the bargaining
team.

These fi nal-hour sessions often require that someone—the mediator, the profes-
sional negotiator, or both—convince the hard-liners that the best deal is at hand
and that the fi nal compromises necessary to reach a settlement should now be
made. Again, the parties’ confi dence in the mediator is critical to the success of
these fi nal dynamics.

Sometimes the mediator is called on in these fi nal stages to make what are
called mediator proposals. Mediator proposals are riskier and more formal ventures
than the many other suggestions a mediator makes during the course of an

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238 Part III. The Functional Level of Labor Relations

intervention. A mediator proposal is normally made only when both parties are
close to a settlement and the mediator believes that by making the proposal the
parties will come to agreement.

In some cases, the mediator may make a proposal that the parties have already
tacitly agreed to but for political or other reasons prefer not to offer themselves.
Some mediators believe that a proposal should never be made unless the mediator
is sure it will be acceptable to both parties.

The preceding description of the dynamics of mediation points out that mediators
must be aggressive in pushing the parties toward a settlement—when the climate,
the timing, and the pressures on the parties are right. The parties often prefer
aggressive mediators, and the aggressiveness of a mediator has been shown to be
related to the effectiveness of the mediation process. 4

Mediation in Interest-Based Bargaining

We have already noted that the role of the mediator in interest-based processes
takes on more of the role of an active facilitator, teacher, and coach than is the
case in a traditional bargaining process. The cycle of negotiations is likely to be
different as well, with less focus on the contract or the strike deadline as the
defi ning moment. Since it is necessary to train negotiators in this method, the
mediation process may begin well before the negotiations process starts. The
FMCS offers training in interest-based bargaining to parties as part of what it
refers to as “preventive mediation.”

In Box 9.1 , George Buckingham, one of the most experienced and successful
interest-based mediators in the FMCS, describes how and when he uses interest-
based techniques to facilitate the bargaining process.

BOX 9.1
How Interest-Based Mediation Works

Well before negotiations are scheduled to begin, I provide parties who
express an interest or who we believe might be good candidates for an
interest-based approach with a one-and-a-half-hour informational briefi ng.
We discuss factors to think about in deciding whether or not to use this
approach. In the process of this discussion, I probe to see if there are any
factors that would lead me to recommend against using the process, such
as no evidence of cooperation in the relationship or a history of contract
rejections by one side or the other.

If the parties agree to take the next step, we then hold a two-day required
training session for all members of the union and employer negotiating
committees. At the end of the training, we make a trilateral (union, employer,
and mediator) decision on whether or not to go forward with the process.

The next step is to hold a prenegotiations meeting to agree on two sets
of ground rules. The fi rst set are transitional ground rules that outline what

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Dispute Resolution Procedures 239

will happen if at some stage the interest-based process breaks down and the
parties need to return to a more traditional process. This serves as a “road
map” back to the traditional process and provides a safety valve for the
parties. The second set are process ground rules. Here we deal with rules
such as how we defi ne consensus decision making, how we will deal with
press releases, how and when information will be communicated to con-
stituents, and so on.

Then we are ready for an exchange of issues using an interest-based
format. This exchange takes the place of a traditional exchange of proposals,
or the laundry list of demands. Each issue is framed as a question that cannot
be answered in a yes or no fashion. For example, an issue might be framed
as: “How can we accommodate employee needs to have greater time off
for funerals and handle staffi ng needs effectively?” We also agree at this
stage on the order we will take up issues and on any information that needs
to be obtained in order to discuss them. Bargaining dates are set at this
time, after giving adequate consideration to the time needed to collect the
necessary data.

For the actual bargaining, we commit to participating in the fi rst two
sessions or until the fi rst issue is settled, to returning when the economic
issues are taken up, and to being present as the process is coming to an end.

What do I do in these sessions? My basic role is to facilitate the process,
to keep the process on a problem-solving track, and to make sure they lay
out all the issues and problems and don ’ t stray into a general discussion
mode that will take them back to traditional positional bargaining. If, in
the rare instance, I feel the need to make a substantive suggestion, I indicate
that I am stepping out of my facilitating role to do so.

One of the hardest tasks the parties have is to agree on standards for
evaluating options. I suggest three simple standards, but the parties are
encouraged to develop their own as well. The three I use are: (1) Can we
do it? (2) Does it convey benefi ts (related to their interests)? (3) Is it acceptable
to the constituents?

The parties take up noneconomic issues fi rst. Then, in perhaps about 35
to 40 percent of the cases, I fi nd us using more traditional approaches to
resolve the deep-gut economic issues. But even here, when the interest-based
process has been successful on the earlier issues, we generally fi nd more of
a problem-solving focus and willingness to listen to each other that is often
absent in the fi nal stages of a traditional negotiation. The parties are more
apt to stay in an interest-based bargaining frame of mind.

Two big differences in my experience with this approach are that the
contract deadline and the strike threat are not major factors. In only three
out of 60 cases I ’ ve mediated in this way has a strike notice been issued,
and then it was done to satisfy constituency needs rather than as a serious
threat across the table. The overwhelming majority of cases have settled
prior to the contract expiration date, while some have gone beyond the

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240 Part III. The Functional Level of Labor Relations

When is this approach likely to be most successful? FMCS commissioner
Buckingham suggests that it is most likely to succeed in one of two situations:
(1) when the parties already have other elements of a cooperative relationship in
place and want to take the next step by carrying problem solving into the bargaining
process; or (2) when there will be serious adverse consequences if the parties
don ’ t solve a set of problems they face. In either case, the key is to have some
strong motivating factor that helps keep the process on course when the going
gets tough.

THE POTENTIAL TENSION BETWEEN WHAT IS
RIGHT AND WHAT WILL BRING A SETTLEMENT

In theory, a mediator is not supposed to be concerned with the substance of the
outcome. Instead, the traditional view is that mediation works because the job
of the mediator is simply to bring the parties to agreement. Yet there are times
when mediators have trouble accepting this principle. Consider, for example, the
mediator in the case described in Box 9.2 . Here, the mediator could not let his
personal views of management ’ s negotiating style get in the way of a settlement.

All mediators must struggle from time to time with the moral question of how
far to compromise their personal values or perceptions of equity in attempting
to fashion a contract settlement. The traditional answer to this question has been
that the mediator ’ s primary responsibility is to help the parties reach an agreement
and to keep his or her values and preferences, or the values and preferences of
the larger society, out of the process. According to this view, the mediator should
not attempt to create a settlement that would be most consistent with the public
interest. The traditional view is that the way the mediator can best represent the
public interest is by helping prevent or ending an impasse. 5

The moral dilemma is even more diffi cult to resolve if questions of individual
rights are part of the settlement package one of the parties prefers. Mediators will
continue to struggle with this moral dilemma and decide how high a priority
they are willing to put on the singular goal of achieving a settlement. 6

expiration with no serious repercussions. In only one occasion did I hold
a mediation session beyond 8 p.m.

I like to use two criteria to judge whether the interest-based approach
has been successful. The fi rst is whether the parties use it again the next
time. About 80 percent do so. The second is whether the number of relation-
ship or noneconomic issues brought to negotiations decrease the second
time around. If interest-based bargaining is able to really solve problems,
the number of “relationship” or noneconomic” issues should go down.

Source : Interview with FMCS commissioner George Buckingham, July 1997.

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Dispute Resolution Procedures 241

BOX 9.2
Report of a Frustrated Mediator

This dispute was resolved after one long night of mediation. The parties
had been negotiating for over a year. A fact-fi nding report had been issued,
and considerable progress had been made on economic issues. The major
remaining unresolved issue was whether these employees [janitors, bus
drivers, and cafeteria workers in a school district] would have binding
grievance arbitration in their contract. . . . It was clear that the [school] board
was adamantly opposed to binding arbitration. . . . The [mediation] process
was made more frustrating by the condescending attitude that the district
administrators took toward the members of the bargaining unit. Unfortunately,
my role at this fi nal step of the process was simply to get the union negotiators
to face the reality that there was no way they could get an agreement
containing binding arbitration. . . .

If I had let my own feelings toward the board negotiating team surface
during mediation, the process would have not only broken down but it
would have been even harder for the parties to put this long and frustrating
case behind them. Consequently, one walks away from this type of dispute
with a lot of pent-up anger and frustration.

Some mediators, especially those who favor the use of interest-based techniques,
reject the traditional view. Instead, they argue that an effective mediator will help
the parties articulate their basic interests and then help steer the process to results
that best serve their interests. In this view, the substantive terms of the settlement
are as important to the success of mediation as a settlement is.

FACT FINDING

When fact fi nding takes place, a third party (a fact fi nder) is called in to study
the issues that are in dispute between labor and management negotiators who
have reached an impasse in their negotiations. After gathering facts, the fact fi nder
then makes a report or an announcement that may be made public. The fact
fi nder ’ s report often includes recommendations about what the fact fi nder believes
is an appropriate settlement of the impasse. Fact-fi nding is premised on the hope
that the recommendations and a neutral report will bring suffi cient pressure to
bear on the parties to induce them to accept the recommendations of the fact
fi nder or to use them as the basis for a negotiated settlement.

Fact fi nding is rarely used in the private sector (like mediation, the NLRA
does not require it), but it is commonly used in the public sector. 7 Fact fi nding
also has been frequently used in negotiations that are covered under the Railway
Labor Act (the Railroad Mediation Board can call for it). The national emergency

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242 Part III. The Functional Level of Labor Relations

dispute procedures of the NLRA also authorize fact fi nding as part of the process
by which the president can call into action an emergency impasse resolution board.

A Case of Fact Finding

The following describes the use of fact fi nding in a dispute between a teachers’
union and a school district.

A neutral [person] fi rst attempted to mediate the dispute but was discouraged by the
professional negotiators for each side. They explained that they knew what their
differences were and that if it was up to them alone they could settle the dispute
without the help of a neutral party. The problems were that the school board was
unwilling to accept what both negotiators agreed was a reasonable salary settlement
and one faction in the union was unwilling to compromise on a contract-language
issue. The mediator therefore agreed to proceed directly to fact fi nding. In the course
of the hearing, the two negotiators presented their cases in ways that made it clear to
the fact fi nder what they would agree to and thus what they wanted the fact fi nder
to recommend. The fact fi nder ’ s recommendations closely followed these tacit admissions.
Both negotiators used the “neutral ’ s recommendations” in selling the tacit agreement
to their constituents.

INTEREST ARBITRATION

Interest arbitration involves the use of a third party (an arbitrator) who is
empowered to impose a settlement in a contract dispute. In interest arbitration,
the arbitrator sets the terms of the contract. Thus, interest arbitration is different
from grievance (or rights) arbitration, in which an arbitrator is used to settle a
dispute during the term or about the implementation of an existing contract (see
Chapter 12 ).

Interest arbitration is not used very often in the private sector in the United
States. The few exceptions in the private sector have been major league baseball
(see Box 9.3 ), national emergency disputes under the Taft-Hartley or Railway
Labor Acts or cases where the parties voluntarily submitted their disputes to
arbitration. Interest arbitration has been used more frequently to settle impasses
in public sector bargaining.

The NLRA gives labor and management the right to strike over impasses and
this leads to limited use of interest arbitration. Many proponents of collective
bargaining in the private sector have long argued that the right to strike (and
thus the absence of interest arbitration) was essential for the preservation of free
collective bargaining .

As one scholar put it over 35 years ago:

In the case against compulsory arbitration there are distinguished prosecutors galore,
and the catalog of inevitable disasters runs the gamut from simple bad decisions to
dislocation of the economic foundations of free enterprise. The division is not liberal/
conservative, nor labor/management—there is no division. All the principal authorities
are in agreement. 8

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Dispute Resolution Procedures 243

BOX 9.3
Major League Baseball Salary Arbitration Procedure

Eligibility

Any Player or Club may submit to salary arbitration with the consent of
the other party. However, a player [with] between three and six years of
Major League service may submit to salary arbitration without the consent
of the other party.

Selection of Arbitrator

The Players Association and the Player Relations Committee shall annually
select the arbitrators.

Procedure

Within three days of salary arbitration submission, the Players Association
and the Players Relations Committee exchange salary fi gures. The Player
has the option of withdrawing within 7 days of the receipt of the Club ’ s
salary fi gure. And in the event the Club or Player reach a salary agreement
before the arbitrator reaches his decision, the matter shall be withdrawn
from arbitration.

Timetable and Decision

The Player and the Club submit the salary fi gures to the arbitrator at the
hearing. The arbitration hearing is held as soon as possible after submission and
scheduled between February 1 and February 20. The arbitrator may render his
decision on the day of the hearing, and shall make every effort to decide no
later than 24 hours following the close of the hearing. Finally, the arbitrator
is limited to awarding only one or the other of the two fi gures submitted.

Conduct of Hearings

Each party is limited to one hour for initial presentation and a half-hour
for rebuttal and submission. There are no continuances or adjournments.

Criteria

The criteria used in determining the Player ’ s worth include the quality of
the Player ’ s contribution to his Club during the past season (including his
overall performance, special qualities of leadership and public appeal), the
length and consistency of his career contribution, the record of the Player ’ s
past compensation, comparative baseball salaries, the existence of any physical
or mental defects on the part of the Player, and the recent performance
record of the Club. In addition, any evidence relevant to these criteria may
be submitted as evidence.

Source : Basic Agreement between the American and National League of Professional
Baseball Clubs and the Major League Baseball Players Association, January 1, 1986.

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244 Part III. The Functional Level of Labor Relations

In this view, interest arbitration should be limited to cases of dire national
emergency or to disputes in which the parties themselves decide it is in their
interest to submit their dispute to a procedural substitute for a strike.

The Use of Interest Arbitration in the Public Sector

As the demand for public sector bargaining became more vocal in the late 1960s
and early 1970s policy makers had to make a diffi cult choice: unions were calling
for collective bargaining rights, while elected offi cials were reluctant to grant
public employees the right to strike. Because both unions and management had
little experience with interest arbitration and doubted its effectiveness, most states
initially turned to fact fi nding as a compromise between the right to strike and
interest arbitration. By the late 1970s, about half the states that had endorsed
collective bargaining for public employees turned to some form of arbitration for
resolving disputes between city governments and their police and fi refi ghters.

Since interest arbitration has been used primarily in the public sector, the public
sector record reveals how well it works. This record is discussed below along
with occasional references to experience with arbitration in the private sector.

Types of Interest Arbitration

There are many different forms of interest arbitration. One key difference is
whether the procedure is voluntary or compulsory. Voluntary arbitration is a
dispute resolution system in which the parties agree to submit their differences
to arbitration. Compulsory arbitration is a system in which law requires the
parties to submit their unresolved differences to arbitration if they cannot reach
a negotiated settlement on their own.

Another important distinction is the difference between conventional arbitration
and fi nal-offer arbitration. Conventional arbitration (which can be either
voluntary or compulsory) is a dispute resolution process in which the arbitrator
is free to fashion any award he or she deems appropriate. Although the conventional
arbitration award may be a compromise between the proposals of the employer
and those of the union, the arbitrator is also free to accept either party ’ s proposals
or, for that matter, to go below the employer ’ s offer or above the union ’ s offer
(although that rarely happens).

Terminology Used in Final-Offer Interest Arbitration

In fi nal-offer arbitration , the arbitrator must choose either the employer ’ s
proposal or the union ’ s; the arbitrator may not fashion his or her own compromise.
As a further distinction, fi nal-offer arbitration may be handled on a total package
basis—that is, the arbitrator must choose the complete offer of the employer or
the complete offer of the union on all issues. Final-offer arbitration can also be
handled on an issue-by-issue basis. The arbitrator, for example, might choose the
employer ’ s wage offer, the union ’ s offer on health insurance, and the employer ’ s
offer on vacation days. 9

There is yet another complication. The arbitrator can be an individual or a
panel of individuals. Panels can either be composed of all neutrals or they can be

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Dispute Resolution Procedures 245

tripartite. Tripartite panels are composed of one or more representatives of the
employer, one or more representatives of the union, and one or more neutrals.

Debates over the Performance and Effects of
Interest Arbitration

What does the use of interest arbitration do to the parties’ ability to negotiate
on their own? What kinds of settlements do arbitrators impose and how do the
arbitrators’ settlements compare with the settlements labor and management reach
on their own? Does interest arbitration prevent strikes? These questions are part
of the controversy that surrounds the use of interest arbitration. The evidence
on these issues is only summarized here because public sector experience with
interest arbitration is examined in detail in Chapter 13 .

Interest arbitration in the public sector has had a better record of preventing
strikes than fact fi nding or bargaining without any impasse procedure has. Although
no dispute resolution procedure, including interest arbitration, can prevent all
strikes, interest arbitration appears to reduce the probability of strikes more than
fact fi nding does.

To date there is little evidence that interest arbitration has been overused where
it is available. The vast majority of disputes tend to be settled without resort to
interest arbitration. Even in states where that have used interest arbitration for
thirty years, the rate of cases going to interest arbitration rarely exceeds 25 percent. 10

The evidence of the effect of arbitration on contract terms is that arbitrators
tend to impose settlements that are not very different from the settlements that
parties who bargain reach where arbitration is not available as an impasse resolution
procedure. The use of interest arbitration across a state to settle public sector
disputes does appear to narrow the range of settlements by eliminating extremely
high and extremely low settlements. The effect of interest arbitration on contract
terms such as wage levels appears to be modest. Where an effect has been measured,
arbitration tends to lead to wage levels that are 5–10 percent higher than wages
in jurisdictions where arbitration is not available.

Voluntary Interest Arbitration in the Private Sector

Voluntary interest arbitration schemes have been used in the private sector in
electrical construction, large construction projects (such as the Cape Canaveral
space center and the Alaska pipeline project), and newspapers.

The only signifi cant private sector use of interest arbitration now occurs in
major league baseball. As noted earlier, major league players and baseball club
owners have negotiated a master collective bargaining agreement for thirty years.
That master contract stipulates that the salaries of individual players are determined
through negotiations between each player and his respective club owner.

As Box 9.3 shows, the master agreement requires that a player ’ s salary be set
by an arbitrator if an impasse is reached between the player and the club owner
in salary negotiations. The arbitrator is restricted to choosing the fi nal offer of the
player or the fi nal offer of the owner. The terms and conditions of employment
for baseball players other than salary are not subject to interest arbitration. Club

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246 Part III. The Functional Level of Labor Relations

owners became very dissatisfi ed with the use of arbitration in the 1990s and tried
to eliminate it in negotiations and during the strike of 1994, but they were not
successful on this point. Instead, the parties modifi ed the procedure by agreeing to
phase in the use of three neutral arbitrators per case rather than a single arbitrator.

Voluntary interest arbitration has also been used on an ad hoc basis as a confl ict
resolution device of last resort. From time to time diffi cult strikes, such as disputes
between the United States Postal Service and postal worker unions, have been
resolved with an agreement to arbitrate (see Chapter 8 ).

BOX 9.4
Interest Arbitration in the California Agriculture Industry

As one of the most essential industries in California, the agriculture industry
had been under intense pressure to fi nd a solution to a subpar collective
bargaining system. Because of this, in 2002, the California legislature passed
a law that created mandatory interest arbitration for cases where employers
and unions in the agricultural industry were unable to come to a consensus
while bargaining for an initial collective bargaining agreement. The law
was quickly subject to legal challenge, although the courts ultimately denied
the challenge.

Hess Collection Winery, an agricultural employer in the Napa Valley,
fi led an appeal claiming that the legislature had no authority to pass a law
mandating interest arbitration. In fact, it went as far as to say that mandating
interest arbitration only in the agricultural sector of the state ’ s economy
seriously violated equal protection guarantees in the state constitution. As
a result of this appeal, the law was brought to the California Court of
Appeals.

On July 5, 2006, because of the need to effi ciently reach an agreement
in collective bargaining contracts in the industry and because the statute
only applies to the initial bargaining offer, the California Court of Appeals
upheld the previous decision and deemed mandatory interest arbitration
lawful because the court believed it to be constitutionally accurate. Justice
Richard Sims of the appeals court stated that the law “bears a rational and
conceivable relationship to a legitimate state purpose,” and as such, it passes
the constitutionality test and should therefore be allowed. Sims went on to
say that “agricultural employees are in an especially unequal bargaining
position with respect to their employers and that their health, safety, and
welfare require special protection.” Therefore, Judge Sims concluded that
extra security must be awarded to them and the law mandating interest
arbitration would help “protect the industry by promoting stability in
agricultural employment.”

Source : “California Court Upholds Constitutionality of State ’ s Mandatory Interest
Arbitration Law,” Daily Labor Report , July 7, 2006, AA-1.

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Dispute Resolution Procedures 247

In voluntary interest arbitration schemes, the parties normally limit the
discretion of the arbitrator. In baseball, the arbitrator rules only on player salary
(although other parts of the master baseball contract are subject to grievance
arbitration).

The key to the negotiation of voluntary interest arbitration plans is that both
parties must perceive benefi ts in agreeing to set aside the right to strike. Labor
and management generally voluntarily accept interest arbitration only when strike
costs are high.

The Structure and Process of Interest Arbitration

A wide array of choices is available for designing the structure of interest arbitration
systems. These structural options determine the nature of the decision-making
process in interest arbitration in important ways. In fact, the structure the parties
choose is a refl ection of their fundamental views on the appropriate functions of
an interest arbitration system. This section describes two types of decision-making
processes in interest arbitration and suggests how these are infl uenced by the
structural design of the system.

A Combined Mediation-Arbitration Approach

The two decision-making processes available are (1) a mediation-arbitration process;
and (2) a judicial decision-making process. Advocates of the mediation-arbitration
process view interest arbitration as an extension of the collective bargaining process
in which the neutral arbitrator seeks to shape an award that is acceptable to the
parties. Mediation-arbitration places a premium on using the interest arbitration
proceeding as a forum for continued negotiations or mediation, albeit with the
arbitrator holding the ultimate authority to decide on the contract.

Those who advocate the mediation-arbitration approach claim that no system
of interest arbitration can hope to survive for long unless it produces outcomes
that are acceptable to the parties.

A Judicial Approach

The countervailing view of interest arbitration holds that the arbitrator should
focus on the “facts” of the case. In this judicial approach, the arbitrator adheres
strictly to predetermined criteria and is not infl uenced by the bargaining power
or preferences of the parties.

NONTRADITIONAL DISPUTE RESOLUTION

The need for skilled third parties in confl ict resolution and problem solving is
not limited to the formal negotiations process. Indeed, in recent years a variety
of new dispute resolution roles have emerged in settings where labor and
management have been attempting to achieve fundamental changes in their bargain-
ing relationships.

For example, neutrals, for example, are increasingly being called on to chair
or facilitate labor-management committees, to serve as consultants to labor and

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248 Part III. The Functional Level of Labor Relations

management in quality-of-working-life programs, to facilitate the joint planning
or joint design of a new plant or work system, or to work on other experimental
projects designed to solve long-standing problems in a bargaining relationship.
All of these roles require the skills of a labor mediator. In addition, these roles
differ from traditional mediation or arbitration roles in several important ways.

First, most require that problems be addressed on an ongoing basis. 11 Often
this requires that the parties fi rst undergo a team-building effort to change their
attitudes and to increase the level of trust they have in each other.

Second, these third parties must have specialized knowledge of the substantive
problems the parties face. The third party is expected to be a consultant who
brings technical expertise to discussions of the problem and is sensitive to the
needs of both labor and management.

Third, the time horizon of the process tends to be very long. Whereas the
traditional mediator is mainly concerned with achieving a settlement of the
immediate impasse, third parties involved in these new roles must focus on the
effects of any decision on the quality of the longer-term relationship.

The behavior of the parties to these new processes is also signifi cantly different
from traditional labor-management behavior. For example, to be successful,
long-term problem solving requires the parties to share information more readily
than they do in traditional collective bargaining.

In response to this growing demand, the FMCS has increased its emphasis on
what it calls “preventive mediation”; that is, programs designed to train the parties
in state-of-the-art labor-management practices or to facilitate more directly efforts
to improve relations in particular industries or particular companies and unions.

At the same time, however, the parties may still need to turn to the traditional
mediation and arbitration processes. In short, both effective confl ict resolution
and longer-term problem solving are critical to the success of contemporary
collective bargaining relationships.

KEY ORGANIZATIONS AND AGENCIES INVOLVED IN
IMPASSE RESOLUTION

The key organizations and agencies that are involved in the resolution of impasses
are summarized below.

American Arbitration Association (AAA): A private nonprofi t organization that
facilitates the process of arbitration. The AAA maintains lists of arbitrators and makes
facilities available that can be used for arbitration hearings. The AAA offers seminars
to train young arbitrators and to keep experienced arbitrators informed about emerging
developments. Much of the arbitration work AAA perform arbitrators is grievance
arbitration, but AAA arbitrators also become involved in interest arbitration.

Federal Mediation and Conciliation Service (FMCS): An agency of the federal
government mandated by the National Labor Relations Act. The NLRA requires
labor and management to notify the FMCS at least thirty days before a strike. The
FMCS includes a staff of 250 mediators who offer their services to labor and management
involved in impasses.

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Dispute Resolution Procedures 249

National Academy of Arbitrators (NAA): A professional society of experienced
arbitrators. Most of the cases NAA arbitrators hear are grievance arbitrations, although
NAA members are also involved in interest arbitration.

National Mediation Board (NMB): An administrative agency created by the
Railway Labor Act. One of the functions of the board is to mediate disputes between
labor and management that arise in the transportation industries covered by the Railway
Labor Act.

State mediation and conciliation agencies: A variety of agencies exist at the
state level to facilitate the mediation of labor impasses. In states that grant public
employees bargaining rights, a separate agency concerned with public sector bargaining
impasses frequently exists. In New York, for example, the Public Employment Relations
Board (PERB) provides mediation assistance among its many functions.

Summary

This chapter described the three major impasse resolution procedures—mediation,
fact fi nding, and interest arbitration. The use of these procedures has varied
extensively. Mediation has been commonly used in both the private and public
sectors. Fact fi nding and interest arbitration, in contrast, have been used in the
public sector with only a few exceptions.

The procedures also vary in the degree to which they constrain the actions of
labor and management. At one extreme is mediation, where the parties can, and
sometimes do, dismiss the mediator or ignore the advice given. At the other
extreme is binding interest arbitration, where the parties must follow the decision
of the arbitrator.

The purpose of any impasse resolution procedure is to help the parties achieve
a contract settlement that both labor and management fi nd acceptable and that
helps sustain a successful labor-management relationship. Good mediators, fact
fi nders, and arbitrators understand the issues that divide labor and management
and have the ability to offer creative solutions to these problems.

Discussion Questions

1. Describe the objectives of mediation.
2. What are the three stages that typically occur in a mediation?
3. Discuss some of the criticisms of interest arbitration.
4. Contrast mediation-arbitration and judicial arbitration.

Related Web Sites

Federal Mediation and Conciliation Service (FMCS):
http://www.fmcs.gov

National Mediation Board (NMB):
http://www.usa.gov/federal-agencies/national-mediation-board

Alternative Dispute Resolution Forum:
https://www.adrforum.com/

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250 Part III. The Functional Level of Labor Relations

Suggested Supplemental Readings

Cullen , Donald E. National Emergency Disputes . Ithaca, N.Y. : New York State School of
Industrial and Labor Relations, Cornell University , 1968 .

Goldberg , Stephen B. , Eric D. Green , and Frank E. A. Sander . Dispute Resolution . Boston :
Little, Brown , 1985 .

Kolb , Deborah . The Mediators . Cambridge, Mass. : MIT Press , 1982 .
Pruitt , Dean G. , and Jeffrey Z. Rubin . Social Confl ict: Escalation, Stalemate, and Settlement . New

York : Random House , 1986 .
Rubin , Jeffrey Z. Dynamics of Third-Party Intervention . New York : Praeger , 1981 .

Notes

1. The parties are constrained to adhere to the decision in a binding arbitration procedure. As
discussed below, occasionally parties will choose nonbinding arbitration.

2. Carl M. Steven, Strategy and Collective Bargaining Negotiation (New York: McGraw-Hill, 1963),
142–146.

3. For analysis of mediation strategies, see Kenneth Kressel, Mediation: An Exploratory Survey
(Albany, N.Y.: Association of Labor Mediation Agencies, 1972); and Deborah Kolb, The Mediators
(Cambridge, Mass.: MIT Press, 1982).

4. One study shows a positive effect for mediator aggressiveness and noted that the more intense
or diffi cult the dispute, the more aggressive the mediator tended to be. See Paul F. Gerhart and
John E. Drotning, “Dispute Settlement and the Intensity of the Mediator,” Industrial Relations 19,
no. 3 (1980): 352–59.

5. Eva Robbins, A Guide for Labor Mediators (Honolulu: Industrial Relations Center, University
of Hawaii, 1976).

6. For a good discussion of this dilemma, see William E. Simkin, Mediation and the Dynamics of
Collective Bargaining (Washington, D.C.: Bureau of National Affairs, 1971), 34–40.

7. Fact fi nding is the most common form of dispute resolution for occupations other than police
and fi refi ghters in the public sector (for these two occupations, interest arbitration is most common).

8. Orme Phelps, “Compulsory Arbitration: Some Perspectives,” Industrial and Labor Relations
Review 18 (October 1964): 8.

9. Some fi nal-offer procedures allow the arbitrator to choose the recommendation of a fact fi nder
involved in an earlier step of the process.

10. Mark Thompson and James Cairnie, “Compulsory Arbitration: The Case of British Columbia
Teachers,” Industrial and Labor Relations Review 27 (October 1973): 3–17.

11. Stephen B. Goldberg, Jeanne M. Brett, and William Ury, “A Study in Metamediation,”
unpublished manuscript, School of Law, Northwestern University, Evanston, Illinois, 1987.

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292

12

BASIC PRINCIPLES

This chapter focuses on the resolution of the confl icts between managers and
employees that commonly arise in the workplace. In unionized settings, this
involves resolving confl icts about contract administration below the level of formal
contract negotiations.

Collective bargaining agreements in the United States are elaborate and detailed
documents. The existence of such extensive labor contracts led to the need for
an orderly way for settling confl icts over interpretations of contract language.

The principle that “management acts and the union reacts” or, put another
way, “it is management ’ s job to manage and the union ’ s job to grieve” is engrained
in U.S. collective bargaining. This has led to a reliance on grievance and arbitration
procedures as mechanisms to resolve confl icts that arise at in unionized workplaces.
The bulk of this chapter discusses how grievance and arbitration procedures
operate.

In nonunion settings, the employer must consider how to resolve the workplace
confl icts that will inevitably occur. In recent years, employers of nonunion
workplaces have increasingly adopted various mechanisms for resolving disputes,
improving communication, and solving problems. Growing concern about the
impact of employment litigation is a major reason for the development of nonunion
dispute resolution. Such lawsuits have helped inspire the controversial expansion
of mandatory arbitration procedures for resolving legal claims. Thus, this chapter
also examines nonunion dispute resolution procedures and the debates over their
role in industrial relations.

THE GRIEVANCE PROCEDURE

The grievance procedure specifi es a series of steps that are to be taken to resolve
a worker ’ s complaint that management has not followed the terms of the collective
bargaining agreement. The steps found in a typical procedure are outlined in Box

Confl ict Resolution at the Workplace

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Confl ict Resolution at the Workplace 293

BOX 12.1
Steps in a Typical Grievance Procedure

Step 1
The union steward and the employee discuss the problem informally with

the employee ’ s supervisor.
The union steward and the employee decide if the problem has been resolved

or, if not resolved, whether a contract violation has occurred and whether
to proceed with a formal grievance.

Step 2
The grievance is put in writing and submitted to the designated line

manager.
The union steward and a management representative meet and discuss the

grievance.
Management ’ s response is put in writing. A member of the industrial relations

staff may be consulted at this stage.
Step 3

The grievance is appealed to top-line management and industrial relations
staff representatives, who meet with higher-level local or national union
offi cers to discuss the grievance and attempt to negotiate a resolution.

Management ’ s response is put in writing.
Step 4

The grievance is appealed to arbitration for a fi nal and binding decision by
a neutral labor arbitrator.

12.1 . Each succeeding step in the decision-making process involves a higher level
of the union and management organizations. The fi nal step in almost all grievance
procedures in unionized settings involves a hearing of the dispute and a fi nal
binding judgment by an arbitrator.

Most often the grievance procedure comes into play when an employee has
a complaint about the actions of a supervisor. Below we trace how an employee
complaint makes its way through the typical grievance procedure.

Step 1: Step 1 of the procedure outlined in Box 12.1 gives the employee and
his or her supervisor the opportunity to resolve the employee ’ s complaint
by talking about the problem. The supervisor might be unaware that there
is a problem and oral discussion might quickly resolve the issue. At this
point, the employee ’ s union steward might help the employee as he or she
brings the issue to the attention of the supervisor.

Step 2: If the grievance (complaint) is not resolved in these discussions, the
employee can choose to drop the matter or proceed to step 2, where the
grievance is put in writing. In step 2, the union steward meets with a

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294 Part IV. The Workplace Level of Labor Relations

management representative and management eventually writes a response.
The process of putting the grievance and management ’ s response in writing
gives the parties the opportunity to formally make their cases, and this often
serves to clarify exactly what is in dispute. At this step, many grievances are
resolved or the grieving party drops his or her complaint.

Step 3: Step 3 in the grievance procedure involves top-line management,
industrial relations staff, local union offi cers, and possibly national union
staff. The involvement of higher-level union and management staff consumes
valuable time and resources, and for this reason a union ’ s decision to press
a grievance to the third step is not usually taken lightly.

Step 4: If the grievance has not been resolved at earlier steps, it can be appealed
to arbitration for a binding decision in step 4. It is the union and not the
employee that decides whether to appeal a grievance to arbitration. Court
decisions gave unions this power on the grounds that it is the union that
creates and “owns” the grievance procedure.

Reasons Why Grievances Are Filed

Employees commonly fi le a grievance when they think management is not fairly
living up to the collective bargaining agreement. The grievance procedure provides
a mechanism for workers to air their displeasure with management ’ s actions, to
change management ’ s behavior, or to receive some form of compensation for
management ’ s actions.

Disagreements about employee discipline are a common source of grievances.
Collective bargaining agreements commonly give management the right to discipline
employees. Contracts often outline certain actions that can lead to discipline,
such as repeated absenteeism or failure to follow a direct order from a supervisor.
An employee might fi le a grievance against a disciplinary action taken by manage-
ment either because the employee contests management ’ s claim that the employee
did something wrong or because the employee believes that the disciplinary action
that was imposed was too harsh for whatever mistake the employee made.

When labor and management negotiate the collective bargaining contract, they
try to cover the major issues and write language that will guide future behavior.
However, the contract does not specify what is to happen under all circumstances.
It would be impossible and too costly for negotiators to write contractual language
that covers any but the most common events. Thus, the parties also turn to the
grievance procedure as a way of resolving issues that the labor contract does not
cover explicitly.

Many collective bargaining agreements, for example, specify that supervisors
are not allowed to perform work that is commonly performed by someone in
the bargaining unit. Unions favor this clause as a way of keeping jobs for union
members and to prevent management from circumventing the terms of the contract
by moving work out of the bargaining unit. When new technology is introduced
at a plant, it often changes the duties workers perform and adds new types of
work. Is the new work still in the bargaining unit or can it be performed by a
supervisor? It would be extremely cumbersome for labor and management to

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Confl ict Resolution at the Workplace 295

include language in the labor agreement specifying in detail what is to happen
in every such case. Instead, the parties use the grievance procedure to resolve
disputes that arise over this issue.

In addition, things frequently happen that were never anticipated by the parties
when they were negotiating the labor agreement. What form of compensation,
for example, should workers receive if they are sent home after a power outage
forces the closing of a plant in the middle of the day? Should employees be paid
for a full day ’ s work in such a case? Should the amount of compensation vary,
depending on how much of the day the employees worked before being sent
home? When the labor contract does not include language that covers this type
of occurrence and employees are upset by the compensation management decides
to provide, the employees might turn to the grievance procedure to settle the
matter.

Filing grievances can also serve other purposes. Employees may fi le grievances
as a way of demonstrating their concern about issues that are not addressed in
the collective bargaining agreement. For example, employees might be concerned
about workplace injuries such as repetitive strain injuries from the way they have
to perform their jobs and may express their concern by fi ling grievances over the
issue. In these sorts of cases, the grievance procedure can serve the valuable
function of warning management about problems that might otherwise be ignored.

Employees and their union also might use the grievance procedure as a tactical
pressure device. Filing grievances over an issue can serve, for example, to rally
employee interest in bringing the issue to the bargaining table in the next contract
renewal negotiation. In this sort of case, the union may know that fi ling grievances
will not lead to immediate changes in management ’ s behavior. However, grievances
will put pressure on management and thereby increase the union ’ s bargaining
leverage.

THE HISTORICAL EVOLUTION OF GRIEVANCE
ARBITRATION

Arbitration is the common device stipulated in labor contracts to resolve grievances
that are not settled in earlier steps (see step 4 in Box 12.1 ). Arbitration is a
quasi-judicial procedure in which a third party settles a dispute by issuing a binding
judgment. The use of arbitration to settle grievances that arise during the term
of a collective bargaining is referred to as grievance (or rights) arbitration.

Arbitration developed early in the U.S. industrial relations system. Arbitration
of minor disputes over the interpretation of agreements, for example, was mentioned
in the United States Industrial Commission Report of 1902. 1 Before World
War II, grievance procedures ending in binding arbitration were common in the
clothing and anthracite coal mining industries.

The Spread of Arbitration

It took the strong advocacy of the national War Labor Board (WLB) during
World War II for grievance arbitration to become a common practice across

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296 Part IV. The Workplace Level of Labor Relations

unionized industries. In many of the thousands of disputes it handled, the board
encouraged the parties to include an arbitration clause in their bargaining agreement,
and in some cases the board required it. Arbitration served as an alternative to
strikes and other types of industrial action for resolving workplace confl icts. This
was an important consideration in the context of a wartime economy where
work stoppages were particularly costly.

The Taft-Hartley Act of 1947 encourage the use of grievance arbitration.
Section 203(d) of the act states: “Final adjustment by a method agreed upon by
the parties is hereby declared to be the desirable method for settlement of grievance
disputes arising out of the application or interpretation of an existing collective
bargaining agreement.” The courts interpreted this provision as indicating that
public policy supported grievance arbitration, which was the most common settle-
ment method parties agreed to use.

Court Encouragement of Arbitration

A series of Supreme Court decisions known as the Steelworkers’ trilogy encour-
aged the use of arbitration and insulated many arbitration awards from judicial
review. These cases also gave grievance arbitration a protected status. 2

The Steelworkers’ trilogy decisions from 1960 are summarized in Box 12.2 .
These three decisions stated that

(1) the courts should rule only on whether a dispute can be arbitrated, they
should resolve any doubts about such questions by ruling in favor of arbitration,
and they should not consider the merits of a grievance when deciding whether
a case can be arbitrated;

(2) the parties should view arbitration as the quid pro quo for giving up the
right to strike and except for issues that are specifi cally excluded from the arbitration
clause, all disputes arising out of contract administration should be resolved by
arbitration; and

(3) the courts should not review the substantive merits of an arbitration decision
but should confi ne their review to whether due process procedures were followed
or whether the arbitrator exceeded his or her authority.

Judicial Deference to Arbitration

The Steelworkers’ trilogy cases established the principle that the courts would
not review disputes that were arbitrable. Subsequent Supreme Court decisions
continued that basic principle and added some modifi cations (see Box 12.2 ). In
the Collyer decision of 1971, for example, the Court deferred to an arbitrator to
decide whether an employer had violated the obligation to bargain in good faith
when the employer unilaterally changed certain wage rates and job duties. This
ruling gave an arbitrator the responsibility of ruling on an unfair labor practice
issue. In the Olin decision of 1984, the courts substantially broadened the unfair
labor practice issues that arbitrators would decide (also see the United Technologies
decision of 1984). Some of the other court cases summarized in Box 12.2 affected
aspects of arbitration that do not involve judicial deference to arbitration.

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Confl ict Resolution at the Workplace 297

BOX 12.2
Key Court and Administrative Decisions that Affect the
Conduct of Grievance Arbitration

Year Case Decision

1957 Textile Workers v. Lincoln Mills Courts may enforce arbitration awards.
1960 “Steelworkers’ trilogy”:

1. Steelworkers v. American
Manufacturing Co. , 363 U.S.
564 (1960)

Courts should determine only arbitrability,
i.e., whether the issue is covered by the
contract, and should not decide the merits of
a case. When arbitrability is in doubt, the
case should be sent to arbitration.

2. Steelworkers v. Warrior Gulf
and Navigation Co. , 363 U.S.
574 (1960)

Disputes over contract terms are assumed
to be arbitrable unless they are specifi cally
excluded. The courts view arbitration
as the quid pro quo for giving up the
right to strike during the term of the
contract.

3. Steelworkers v. Enterprise
Wheel and Car Corp. , 363
U.S. 593 (1960)

Courts should not review the substantive
merits of the arbitrator ’ s decision as long as
the arbitrator ’ s award is based on the content
of the agreement.

1970 Boys Markets, Inc . v. Retail
Clerks, Local 770 , 389 U.S.
235 (1970)

Courts may issue an injunction against
a union that forces it to refrain from
violating a no-strike clause or when an issue
is covered by an arbitration clause in the
contract.

1971 Collyer Insulated Wire and Local
Union 1098 , 192 NLRB
837 (1971)

The NLRB will defer to arbitration disputes
when the issue could be decided either
through arbitration (because it is covered by
a clause in the bargaining agreement) or by
an NLRB ruling (because the grievance
alleges an unfair labor practice).

1976 Hines v. Anchor Motor Freight,
Inc. , 424 U.S. 554 (1976),
preceded by several other
key cases, especially Steele v.
Louisville & Nashville R.R.,
323 U.S. 192 (1944) and
Vaca v. Sipes , 386 U.S. 171
(1967)

The courts should not sustain an arbitration
award when the union has violated its duty
to represent the grievant fairly. Federal
courts will decide suits of this nature.

1983 Bowen v. United States Postal
Service , 103 U.S. (1983)

A union may be held liable for a portion of an
award to an employee if the union has
violated its duty of fair representation.

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298 Part IV. The Workplace Level of Labor Relations

Year Case Decision

1984 Olin Corporation , 268 NLRB
86 (1984)

This NLRB decision expanded the Collyer
doctrine of deferral to arbitration of disputes
involving unfair labor practices. The NLRB
will defer to an arbitrator ’ s decision unless
the arbitrator ’ s award is “clearly repugnant”
to the law. The NLRB retained the right to
decide whether an arbitrator adequately
considered the facts that would constitute an
unfair labor practice.

1984 United Technologies , 268 NLRB
83 (1984)

This NLRB decision further expanded the
Collyer doctrine of deferral to arbitration of
disputes that are brought to the board before
arbitration that involve statutory rights and
are covered by a collective bargaining
contract.

1991 Gilmer v. Interstate/Johnson Lane
Corp. , 500 U.S. 20 (1991)

Statutory claims can be arbitrated without
resort to the judicial forum. Arbitration of a
statutory claim, however, does not forgo the
substantive rights afforded by the statute.

2001 Circuit City Stores v. Adams ,
532 U.S. 105 (2001)

The court ruled that according to the Federal
Arbitration Act, employment disputes must
be settled exclusively by fi nal and binding
arbitration if so dictated by the employment
contract. Only interstate transportation
workers are excluded.

2002 Equal Employment Opportunity
Commission v. Waffl e House,
Inc. , 534 U.S. 279 (2002)

Limits the decision in Circuit City . The court
ruled that the EEOC still has the right to
pursue judicial relief for victims of
employment discrimination, even if the
individuals signed an agreement to settle all
disputes through binding arbitration with the
employer.

2009 14 Penn Plaza v. Pyett , 556
U.S. 247 (2009)

The court ruled that a union-negotiated
arbitration clause in a collective bargaining
agreement can require individual employees
to send statutory employment rights claims
to arbitration instead of going to court.

2011 AT&T Mobility v. Concepcion ,
563 U.S. 333 (2011)

The court ruled that waivers of the right to
bring a class action contained in an
arbitration agreement are enforceable.

2012 D. R. Horton, Inc. , 357 NLRB
184 (2012)

The NLRB ruled that class-action waivers in
employment arbitration agreements violate
the right of employees to engage in
concerted activity’ under section 7 of the
NLRA.

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Confl ict Resolution at the Workplace 299

Over time, grievance arbitration procedures have evolved from a clinical approach
to a more judicial approach. The WLB had advocated the clinical approach, and
this approach was frequently used during the early postwar years. 3 The clinical
approach emphasizes mediation of disputes, informal procedures, and arbitrator
discretion in helping the parties develop a working relationship and consistent
policies for interpreting and administering a contract.

In the 1950s, as the environment for collective bargaining became more structured
and a body of past precedents grew, the arbitrator ’ s scope of discretion narrowed.
Both unions and management began to demand a more judicial approach to
arbitration. The judicial approach is more formal and legalistic. The clinical
model of arbitration may have fi lled a void in an otherwise unstructured environ-
ment, but as the parties formalized their internal policies, they turned to arbitrators
only in disputes where their differences were clearly defi ned by the contract and
the precedents that had arisen.

Thus, although modern grievance arbitration is still considerably more informal
than court proceedings, it has come to rely on the use of formal rules of evidence,
the examination and cross-examination of witnesses, submission of written briefs
and post-hearing briefs, and written transcripts. The heavy formality of the grievance
arbitration procedure has led some parties recently to search for alternative dispute-
resolution procedures, a subject we discuss in more detail later in this chapter
and in the next chapter.

THE FUNCTIONS OF GRIEVANCE PROCEDURES
AND ARBITRATION

Grievance and arbitration procedures serve the needs of three separate
constituencies—labor, management, and society.

Employee Interest in Due Process and Fairness

The grievance and arbitration procedures serve the interests of workers by delivering
industrial justice and by protecting workers who use the procedure from recrimina-
tion for having exercised their rights. When workers lose confi dence in the
effi cacy of these procedures, they may turn to other potentially more costly and
disruptive mechanisms to provide due process. Thus, management often agrees
to grievance and arbitration procedures to provide employees with due process
because of the potential high costs of the alternatives.

Employer Interest in Labor Peace

Employers are attracted to the grievance and arbitration procedures because they
reduce the likelihood that disputes that occur during the term of a labor contract
will lead to stoppages in production. In exchange for accepting third-party arbitration
of grievances, management commonly gains union acceptance of a clause that
eliminates the union ’ s right to strike over an issue that is covered by the grievance
and arbitration clause. The labor contract between General Motors and the UAW,
for example, contains the following language:

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300 Part IV. The Workplace Level of Labor Relations

During the life of this agreement, the Union will not cause or permit its members to
cause, nor will any member of the Union take part in any sit-down, stay-in or
slow-down, in any plant of the Corporation, or any curtailment of work or restriction
of production or interference with the production of the Corporation. The Union
will not cause or permit its members to cause nor will any member of the Union take
part in any strike or stoppage of any of the Corporation ’ s operations or picket any of
the Corporation ’ s plants or premises until all of the bargaining procedure as outlined
in this Agreement has been exhausted, and in no case on which the Arbitrator shall
have ruled. 4

The strong support of the Supreme Court for arbitration in the Steelworkers’
trilogy was based in part on the fact that management ’ s agreement to arbitrate
grievances is typically the quid pro quo for a union ’ s agreement to include a
no-strike clause in contracts.

Some labor agreements exclude particular issues from arbitration and instead
allow the union to strike over unresolved grievances about these issues. Production
standards (rules governing the pace of work) and health and safety issues are
sometimes designated as nonarbitrable. For example, when issues involve health
or safety, it may be impractical to require employees to follow management ’ s
orders and then wait for arbitration to settle disputes over the appropriateness
and fairness of those orders. Thus, some contracts allow workers to strike over
health and safety issues.

Joint Interests in Continuity and Consistency

Another function the grievance and arbitration procedures serves is that it addresses
the common interests of labor and management. As Neil Chamberlain and James
Kuhn have noted, labor and management have a mutual interest in achieving
continuity and consistency in the application of a collective bargaining agreement.
They both also benefi t from procedures that allow them to be fl exible as they
address unforeseen developments and meet the unique needs of different groups
and individuals. 5

Finding the appropriate balance between uniformity and fl exibility is a key
challenge in administering the employment relationship. It is a particular challenge
for grievance procedures and arbitration.

Society ’ s Interests in Industrial Peace and
Workplace Democracy

Grievance and arbitration procedures serve the interests of society by preserving
industrial peace during the term of the contract, by keeping industrial disputes
out of the courts or regulatory agencies, and by ensuring that unions and employers
comply with public policies governing employment. As we will show, this set
of public functions is becoming increasingly complex.

As the Supreme Court articulated in the Steelworkers trilogy of cases, collective
bargaining between labor and management establishes a form of democratic
governance of the workplace. In this vision of workplace democracy, arbitration
of grievances by neutral labor arbitrators serves a function similar to that of the

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Confl ict Resolution at the Workplace 301

courts in providing independent adjudication of legal disputes. As Justice Douglas
argued, “The grievance machinery under a collective bargaining agreement is at
the very heart of the system of industrial self-government. Arbitration is the means
of solving the unforeseeable by molding a system of private law for all the problems
which may arise and to provide for their solution in a way which will generally
accord with the variant needs and desires of the parties.” 6

HOW ARBITRATION WORKS

Grievance arbitration systems have several core components. The specifi c design
and operation of these components varies across collective bargaining agreements,
but the basic role of the key components is similar.

The Components of Arbitration

The core of the arbitration procedure is a hearing in which the labor and manage-
ment representatives present their positions on the issue in dispute to an arbitrator.
These representatives are often lawyers, but others also act as representatives in
arbitration, particularly on the union side. At some point after this hearing, the
arbitrator announces a judgment on the issue. This decision is binding on the
parties. Before or after the hearing, the parties sometimes submit briefs to the
arbitrator. Thus, arbitration has three components: prehearing briefs , the hearing,
and the arbitrator ’ s decision .

Prehearing Briefs

Management and union representatives can submit prehearing briefs to the
arbitrator. In these briefs, the parties can present their views of the issues
and describe the evidence that supports their position. Briefs vary in length;
sometimes they are long documents that are similar to legal briefs presented in
legal cases.

In some cases, the parties jointly present prehearing stipulations to the arbitrator.
A stipulation is an agreement between the parties about one or more of the
facts or issues in dispute. For example, the parties might stipulate that an
employee was absent from work, but ask the arbitrator to decide what was the
appropriate penalty for being absent. Briefs and stipulations can make it easier for
the parties in the arbitration hearing to quickly focus on the evidence and issues
in dispute.

The Arbitration Hearing

In the arbitration hearing, the parties present their positions and evidence
to support their cases. Hearings usually start with opening statements by union
and management representatives. In disciplinary cases, management will commonly
be asked to present their statement fi rst.

Union and management representatives then present evidence to support their
cases. Such evidence might include witnesses who observed particular events. If
an employee is charged with committing an act that violates company policy,

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302 Part IV. The Workplace Level of Labor Relations

such as hitting a supervisor, for instance, management might call as a witness
someone who saw the worker and supervisor interacting. Unlike what happens
in court hearings, there are no rules that exclude certain types of evidence in
arbitration. However, the arbitrator will use his or her judgment about how
much weight to give the evidence. For example, an arbitrator will generally give
much greater weight to a fi rsthand account of an incident from a witness who
saw what happened than to a secondhand account.

Evidence that documents past behavior by the employee or the company is
critical in many arbitration hearings. The customs of a company and past practices
in the plant are important criteria as an arbitrator makes a decision.

The hearing will typically end with closing statements by each side in which
they summarize the key aspects of their case and their supporting evidence. The
testimony given will sometimes lead union or management representatives to
alter their arguments during the course of the hearing. Thus, it is not unusual
for the parties’ closing statements to focus on issues and evidence that differ
substantially from the issues they raised in their opening statements.

The hearing does not bring the presentation of evidence and arguments to
a close. The parties can present their views in a post-hearing brief, and they
often do this in cases in which the issues in dispute are highly technical or
complicated. Although the use of prehearing and post-hearing briefs may help
the arbitrator resolve complex issues, they also add to the length and cost of
arbitration.

The Arbitration Award

The arbitrator ’ s decision, which is commonly known as the arbitration award
is announced sometime after the hearing. Some labor contracts stipulate time
limits for these awards. The arbitrator ’ s award can be written or oral, depending
on the language in the labor agreement and the preferences of the arbitrator.
Although arbitrators tend to follow similar procedures and look at similar kinds
of evidence, the preferences of individual arbitrators often play an important role
in shaping their awards.

In the award, the arbitrator commonly states the issues and facts in the case.
The arbitrator also summarizes the contentions and claims the parties have made
in the hearing or in briefs. The arbitrator might discuss the merits of each side ’ s
evidence and claims. Of course, the most important part of the award is the
section that outlines the judgment the arbitrator has reached on the dispute. The
arbitrator can uphold or deny the grievance and has substantial discretion in
fashioning a remedy to the dispute.

In a grievance case in which a fi rm has discharged an employee, for example,
the arbitrator can deny the grievance and allow the discharge to stand or he or
she can uphold the grievance and order the employer to reinstate the employee.
If reinstatement is ordered, the arbitrator can order the company to pay the
employee the full wages that have been lost due to the discharge. The arbitrator
also could fashion a compromise settlement to such a case by ordering reinstatement
but not ordering any back pay. Or he or she might order some other remedy.

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Confl ict Resolution at the Workplace 303

The grievance-arbitration procedure gives arbitrators substantial discretion to
fashion any remedy he or she believes is appropriate.

Arbitrators commonly see their task as resolving the grievance. They do not
commonly add substantial punitive penalties to their decisions. Thus, in the
hypothetical discharge case mentioned above, the best the employee could do is
gain back the job, any back pay, and any lost rights (such as seniority lost while
on discharge). The arbitrator would not assess a large punitive monetary penalty
against the employer.

The Arbitrator ’ s Decision Criteria

What does an arbitrator consider when deciding how to rule in a case? The next
section outlines the criteria arbitrators commonly use in discipline and discharge
cases. We use discipline and discharge as examples in part because these are
frequent and important sources of grievances.

Discipline for Just Cause

Most labor agreements contain a clause stating that management has the right
to discipline or dismiss employees only for just cause . Grievances over disciplinary
actions and dismissals arise so frequently in part because labor agreements rarely
defi ne just cause precisely.

In a discipline case, the arbitrator must fi rst decide if the employee actually
did the act that management claims violates the labor agreement. If the arbitrator
is convinced that the act did not occur, the grievance is upheld. In a case in
which management alleges that an employee hit a supervisor, for example, the
arbitrator would rely on available evidence (possibly the testimony of eyewitnesses)
to determine if the employee did willfully hit the supervisor. If the arbitrator
concludes that the act did occur, he or she must then decide if this act was a
violation of the labor agreement.

Progressive Discipline

If the arbitrator concludes that the act did occur and that it violated the labor
agreement, he or she must then decide whether the discipline the company
imposed is appropriate. Arbitrators commonly require management to impose
progressive discipline, in which the penalties increase in a stepwise fashion if
there are repeated offenses. If an employee is absent one time after years of faithful
service to the company, for example, an arbitrator is unlikely to uphold a penalty
of discharge. Arbitrators allow severe disciplinary penalties for repeated absences,
however, and want those penalties to increase as the number of absences mount.
Corrective discipline is the underlying principle; that is, discipline should do
more than punish. Arbitrators commonly require management to take steps to
assist employees in correcting their actions and performance. The common steps
in progressive discipline are issuing an oral warning, suspending the employee
for some period of time, and then discharging the employee. Needless to say,
when the offense the employee committed is severe, for example destroying
major company property, the arbitrator might uphold immediate discharge.

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304 Part IV. The Workplace Level of Labor Relations

The Importance of Past Practice

Arbitrators commonly rely heavily on the custom and past practice of manage-
ment policy as a guide as they make decisions about grievance cases. If in the
past employees in a fi rm have customarily been suspended for one week for their
third unexcused absence, for example, an arbitrator would not allow a different
disciplinary penalty for another employee for a similar offense unless there were
extenuating circumstances. As a result, in most arbitration hearings, union and
management representatives present their views about what past practice has been
for related cases. If a similar case has not arisen in the same fi rm, the parties (or
the arbitrator) might turn to customary practice in another fi rm or industry to
justify their actions.

The Impact of Public Policy Considerations in Arbitration

The role of the arbitrator is to interpret and decide grievances based on the
collective bargaining agreement. The arbitrator ’ s authority comes from the
agreement, and to the degree that his or her decision is based on factors that go
beyond the terms of the agreement, the decision lacks this authority, which then
means that it is not binding on the parties. At the same time, the expansion of
employment laws since the 1960s has raised concerns about whether grievance
and arbitration procedures should be responsive to the public policies that govern
employee rights. Of chief concern is whether arbitration should be used to resolve
claims of discrimination based on the protection of Title VII of the Civil Rights
Act or whether those claims should be left to the courts to resolve. The same
concern arises in claims that involve alleged violations of federal and state laws
about safety and health, wages and hours, pensions, disability benefi ts, workers’
compensation, unemployment compensation, and many other regulations that
may overlap or even confl ict with the provisions of the collective bargaining
agreement.

The arbitration community is divided over the issue of whether arbitrators
should consider the requirements of federal and state laws when deciding grievances
or instead confi ne their decisions to interpretations of the rights accorded by the
bargaining agreement. Those who advocate that arbitrators should stick to the
bargaining agreement do so because they fear that considerations of public policy
will increase judicial scrutiny of arbitration decisions and that arbitrators may
make erroneous interpretations of such laws. They believe that arbitration has
been widely accepted as an institution by the parties and that the Supreme Court
assigned it a protected status in the Steelworkers’ trilogy precisely because arbitrators
limit their decisions to issues in which they have special expertise. Thus, advocates
of minimal reference to federal and state laws are ready to trade off a reduced
scope of jurisdiction in arbitration for protection of the status and autonomy that
the highest court in the land has afforded labor arbitration since 1960.

Those who argue that arbitrators should play a more active role in resolving
claims that involve public laws do so with full awareness that the arbitrator ’ s role
would shift from serving primarily the interests of the parties toward serving
public policies. The central arguments in favor of this new role are that arbitration

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Confl ict Resolution at the Workplace 305

is still cheaper, faster, and more effi cient than the already overloaded judicial
system. In this new role, it is argued, arbitration would remain a useful procedure
for resolving disputes that arise under collective bargaining.

Who Are the Arbitrators?

The people who serve as arbitrators usually have some expertise in labor relations
and the particularities of the industry in which the case arises. Some labor agree-
ments provide for permanent arbitrators (“umpires”) who are designated to handle
all or some fraction of the grievances that arise during the term of a contract.
The American Arbitration Association (AAA) is a private organization that parties
often use to facilitate the process of arbitration. The AAA maintains an active list
of arbitrators and can provide rooms for holding hearings. A labor contract might
stipulate that parties should turn to the AAA for a list of fi ve arbitrators and then
allow each side to take turns crossing off names from the list to generate a decision
about which arbitrator will hear a particular case.

Some arbitrators work at arbitration as a full-time occupation. There are also
many part-time arbitrators who are also industrial relations or law school professors.
Box 12.3 , provided by renowned arbitrator Arnold Zack, describes who the
arbitrators are and how someone can become an arbitrator.

BOX 12.3
Who Are Arbitrators and How Can I Become One?

Virtually every collective bargaining agreement contains provisions for
arbitration to resolve workplace disputes. The union agrees to continue to
work while the case is being processed and the employer agrees to comply
with the arbitrator ’ s decision including remedy to make whole if such a
remedy is awarded. Such agreements also provide the procedures for selecting
arbitrators, usually by agreeing on a single arbitrator or a revolving panel
for the life of the parties’ agreement or by using the procedures of the
American Arbitration Association or the Federal Mediation and Conciliation
Service (FMCS) if the parties are unable to agree on an arbitrator for a
pending case.

Although several thousand individual arbitrators exist in the United States,
most arbitration is done by the 600 members of the National Academy of
Arbitrators (NAA), who are admitted to the academy after they have heard
at least fi fty cases in a fi ve-year period. Concern over getting a decision
that might make the employee whole and that conforms to the terms of
the contract often leads disputants to wait many months for their preferred
choice among the more seasoned arbitrators instead of trying newer, less
experienced arbitrators. This makes it challenging for new entrants to gain
experience and accounts for the rising average age of NAA arbitrators,
which is now in the mid-60s.

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306 Part IV. The Workplace Level of Labor Relations

While it is said that 90 percent of the cases are heard by 10 percent of
the arbitrators, new people are always breaking into the fi eld. Parties want
arbitrators with mature judgment and experience in labor-management
relations that is not easy to acquire without working on the union or
management side. But it is often diffi cult for partisans to gain acceptability
unless they have somehow purged themselves of alleged bias by spending
some time working in a neutral occupation, such as in academia or working
for a neutral government agency. Some newer arbitrators have come into
the fi eld by serving as interns with established arbitrators or from careers
in government labor management agencies or as teachers of law, labor
relations, economics, and psychology. Arbitration can hardly be an entry-level
occupation for one ’ s career choice. Rather, becoming an arbitrator is more
a later-in-life happening as a reward for a career of fairness in whatever role
an individual plays in the labor-management fi eld. If you want to be an
arbitrator, don ’ t give up your day job!

Source : Arnold Zack, arbitrator and former president, National Academy of
Arbitrators

The Union ’ s Decision to Go to Arbitration

It is not a simple matter for a union to decide whether to press a grievance to
arbitration. Arbitration is costly. A union might decide to drop a grievance if it
believes the case is not winnable. Or a union might drop a grievance even though
it thinks it can win the case if it concludes that the issue in dispute is insignifi cant
and not worth the effort. A union might also decide not to bring a grievance to
arbitration if it believes the issue is very important and should be brought up at
the next contract negotiations. In this situation, the union might fear that winning
the case in arbitration would diffuse the employee ’ s concern and remove leverage
it needs to press its case in negotiations.

Conversely, a union might decide to proceed to arbitration even if it believes
the case is not winnable if union offi cers feel an obligation to the grievant (maybe
because the grievant has loyally supported the union over the years) and cannot
convince the employee to drop the issue. The union may also feel pressure to
proceed to arbitration because of fear that the employee will fi le a legal claim
contesting the union ’ s decision not to go to arbitration. The union owes a legal
duty of fair representation to the individual employee as it makes the decision
of whether to proceed to arbitration.

The Duty of Fair Representation

In 1944, the Supreme Court held that in return for the right of exclusive rep-
resentation, the union has the duty to represent all members of the bargaining
unit “without hostile discrimination, fairly, impartially, and in good faith.” 7 Since
then, the union ’ s duty of fair representation has become an important issue.

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Confl ict Resolution at the Workplace 307

Four related developments brought the issue of fair representation to the fore:

1. The stringency of the standards the courts use to judge whether an employee
has been fairly represented by the union.

2. The willingness of individual workers to bring claims against unions for
failure to represent them fairly.

3. The increase in the number of court cases that deal with this issue.
4. The resulting reluctance of unions to drop grievances of questionable

merit for fear that they will be sued for failure to represent the grievant
fairly.

The U.S. Supreme Court has defi ned the duty of fair representation in a way
that prohibits “arbitrarily ignoring a meritorious grievance or processing it in a
perfunctory manner”; fraud, deceit, or bad-faith conduct in the handling of a
grievance; and refusal to handle a grievance because of personal hostility toward
the grievant. 8

In Hines v. Anchor Motor Freight, Inc. (1976; see Box 12.2 ), the court ruled that
both the employer and the union were to blame for failure to handle an employee
representation case fairly. 9 The case involved an employee whose discharge had
been upheld in arbitration. After the arbitration award was rendered, new evidence
was discovered that proved that the employee was not guilty of the offense. Both
parties were charged with failure to fully investigate the facts of the case in the
original procedure.

In Bowen v. United States Postal Service (1983), the Supreme Court went one
step further; it made a union and a company both liable for back pay in a case
in which an employee was reinstated after the union refused to take the case to
arbitration. 10 The result was that the union was required to pay part of the
employee ’ s lost wages even though it was the employer ’ s wrongful decision that
had led to the employee being out of work.

Unfortunately, these various judicial efforts to clarify and specify the standards
to be applied in cases involving the duty of fair representation have not yielded
unambiguous criteria for evaluating a union ’ s performance. Although individual
employees may sometimes feel that their union is not handling their grievances
appropriately, there is also a danger that the threat of a lawsuit based on duty of
fair representation may lead the union to take weak cases to arbitration instead
of dropping the appeals. Taking unmeritorious cases to arbitration creates additional
costs for the union and ultimately for individual union members because it is
their dues that give the union the resources to pay for arbitration hearings.

THE CONNECTIONS BETWEEN GRIEVANCE
PROCEDURES AND OTHER ASPECTS OF THE
LABOR-MANAGEMENT RELATIONSHIP

In many ways, the operation of the grievance procedure is closely linked to other
aspects of the labor-management relationship. The next section considers some
of these linkages.

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308 Part IV. The Workplace Level of Labor Relations

The Impact of Trust on Contract Bargaining and Contract
Administration

The administration of a collective bargaining agreement does not operate in isolation
from the events that take place in the negotiations process. The behavior and
attitudes of the parties during negotiations typically carry over into the administration
of the contract. This is not surprising because the same factors that increase the
level of confl ict and reduce the ability of the parties to settle without an impasse
in negotiations also increase the level of antagonistic behavior during the administra-
tion of the contract.

The level of trust between the parties often carries over directly from contract
administration to contract negotiations. When a large backlog of unresolved
grievances piles up and adds to a hostile atmosphere between the parties during the
term of the agreement, the negotiations process becomes a convenient forum for
venting these hostilities. Similarly, when the grievance procedure or an arbitration
decision has failed to resolve a problem, one party or the other can be expected
to place a demand on the negotiation table to remedy the situation. On the
other hand, vague or inconsistent language that was negotiated in a climate of
distrust is likely to set the stage for confl ict during the administration of the
agreement.

Researchers have found that cooperative attitudes between union and manage-
ment offi cials increase the likelihood that grievances will be settled at the lower
steps in the procedure. 11 Data from the auto industry show a positive correlation
between the rate of grievances fi led and two indicators of the intensity of confl ict
in local contract bargaining: the number of issues introduced during the negotiations
and the length of time it takes to reach a contract settlement. 12

A comparative study of the dynamics of grievance settlements in two auto
plants further illustrates this point. In the plant that exhibited a highly adversarial
relationship, grievance rates and rates of appeal to higher steps in the procedure
followed the cycle of bargaining. That is, the union in this plant would save up
grievances and fi le them just before the start of contract negotiations to use this
stockpile as a lever in negotiations and to rally the rank and fi le in support of the
union ’ s contract demands. In contrast, no such politicization of the grievance
process occurred in a comparable auto plant that had a history of cooperative
labor-management relations. 13

James Kuhn has found that a lot of bargaining commonly occurs at the work
group level outside the formal grievance procedure. Kuhn found that work groups
can engage in fractional bargaining —that is, informal bargaining with the
supervisor to modify or even to ignore provisions of the agreement that do not
suit the group ’ s particular needs. 14

Midterm or Continuous Bargaining

The average length of collective bargaining contracts appears to be increasing in
the United States. Federal Mediation and Conciliation Service data suggest that
the duration of nearly 40 percent of new agreements is more than three years.
Making this practice work, however, requires some means of addressing issues

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Confl ict Resolution at the Workplace 309

that arise during the term of the agreement. Several ways of doing so, in addition
to the grievance procedure, have been developed.

One long-standing practice is for labor and management negotiators to meet
periodically to explore issues and reach informal agreements that are perhaps
codifi ed as letters that supplement the bargaining agreement. These letters are in
effect binding commitments—they can be enforced through the grievance procedure,
but they are meant to be somewhat less permanent than formal contract language.
In some cases, the parties clarify how specifi c contract provisions will be interpreted
or applied to different groups. Another practice, known as continuous bargaining
is becoming more common, in which teams of company and union representatives
engaging in bargaining over issues that come up during the term of the contract
rather than waiting for the existing contract to expire. The advantage of this
approach is that it can establish clear guidelines for when issues are dealt with,
the potential range of issues, and the scope of authority or discretion for dealing
with issues that come up during a long-term contract. It also provides protection
against erosion of contract provisions by individual supervisors or groups who
see some contract provisions as a constraint in their ability to address problems
with production or service delivery. Instead of trying to get around the contract,
parties can bring these problems to the mid-term or continuous bargaining forum.

Many labor and management leaders now use the interest-based principles used
in contract negotiations to address problems that arise during the term of a
collective bargaining agreement. This usually involves setting up some type of
subcommittee or task force to study a problem and recommend a solution. More
and more, the administration of labor agreements is blending with these and other
problem-solving processes and the various types of employee and union-management
participatory processes that we discussed more fully in Chapter 11 .

The Limits of Arbitration: Confl icts over
Technological Change

Although arbitration is effective in resolving many workplace confl icts, technological
change can produce problems that are diffi cult to resolve through the traditional
arbitration mechanism. Changes in technology can render previous unit determina-
tion decisions obsolete by modifying how the work is performed, raising the
question of whether the new jobs created should be excluded from the existing
unit. Computer-aided design (CAD) is one example of such a technological
change. CAD can transfer drafting, model making, and other similar jobs from
their traditional place in blue-collar production and maintenance units to the
purview of design or manufacturing engineers. These engineers have traditionally
been nonunion or have been members of a separate engineers’ union and bargaining
unit. In the aerospace industry, for instance, confl ict has arisen over whether
members of the machinists’ union or members of the professional engineers’
union should be given the work of maintaining the thousands of computers
aerospace companies use.

Box 12.4 describes another technology-related dispute that was ultimately
resolved by an arbitrator. In this case, robots took over some of the tasks traditionally

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310 Part IV. The Workplace Level of Labor Relations

BOX 12.4
Arbitrating Cases involving Technological Change

The Issue

Did the company violate the collective bargaining agreement when it assigned
certain machining and fi xturing work on robotics to nonbargaining unit
personnel? If so, what shall be the remedy?

The Facts

The grievant and other bargaining unit personnel did fi xturing work on
production technology referred to as Robot No. 1. They did similar work
for a while on Robots No. 2 and No. 3, but then this assignment stopped
in 1984. In December 1983, the company formed a new department called
Advanced Automation and Technology, and the fi xturing work, what the
company calls “development work,” was given to nonbargaining-unit
engineering personnel assigned to the new department.

The Arbitrator ’ s Discussion

In establishing the Advanced Automation and Technology Department, the
company made a major change that affects the allocation of work that
previously had been done by tool room personnel. . . . In a world of changing
technology and methods, specifi c duties and responsibilities may shift within
an organization. The issue in this case arises because of a shift from earlier
technology (that is rather standard and can be adapted in a straightforward
manner by bargaining-unit personnel) to new technology that requires
considerable experimentation by engineers and technicians.

And so we have a situation where an organizational change has shifted
the function of preparing production technology, but it is not clear whether
the new skills and duties that are involved belong in the bargaining unit or
elsewhere in the organization. Given the grey area that is involved in this
dispute, it would be desirable for the parties to establish principles to guide
the allocation of work.

The Arbitrator ’ s Decision

Given the fact that the union has not established conclusively that fi xturing
work for robotic technology belongs to the bargaining unit, it was not a
violation of the collective bargaining agreement when the company assigned
certain machining and fi xturing work to nonbargaining-unit personnel.

Nonetheless, given that the establishment of the Advanced Automation
and Technology Department represented a major decision with important
consequences for the bargaining unit, . . . the parties are directed to negotiate
in good faith over the effects of this change.

Source : Arbitration award of Robert B. McKersie in the case of Northrup Corporation
and United Auto Workers Local 1596, 1 July 1986. Adapted and used with permission
of the arbitrator.

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Confl ict Resolution at the Workplace 311

performed by blue-collar workers. The issue was in part about who should be
given the job of bringing the robots on line and adapting their specifi cations so
they could perform specifi c jobs.

This example illustrates an important feature of the structure of bargaining in
the United States. Because so much rests on the defi nition of the boundaries of
bargaining units, many fi ne legal distinctions have been drawn over the years.
Labor and management often rely on these legalistic rulings by the NLRB or by
arbitrators to modify the boundary of a bargaining unit to fi t changing technologies
or changing company practices.

As new technologies and new ways of organizing work are adopted, these
issues will become more common. The parties will need to fi nd better ways of
resolving the issues than through arbitration or NLRB precedents. As the arbitrator
quoted in Box 12.4 observed, it is generally preferable for the parties to develop
their own principles for handling these issues as they arise than to rely on an
arbitrator to devise a viable solution after the fact.

The Japanese labor relations system and some European systems may be better
suited to responding to changing technologies than the U.S. system because they
include both blue- and white-collar workers in the same union and in the same
election or bargaining units (see Chapter 15 ). In Japan, for example, enterprise
unions represent all blue- and white-collar workers in a single fi rm. In Germany,
most industrial unions include both the blue- and the white-collar workers employed
in a company and in an industry. In Great Britain, on the other hand, a tradition
of separate blue- and white-collar unions and a greater reliance on craft unions
makes this problem potentially more troublesome than it is in our country. These
issues are important because labor relations systems that make fi ne distinctions
among election and bargaining units may be more likely than others to face
diffi culty in adapting to the new technologies now spreading across industries.

EVALUATING THE PERFORMANCE OF THE
GRIEVANCE SYSTEM

Just as one important measure of the effectiveness of the negotiations process is
whether the parties can avoid strikes and impasses, an important criterion for
evaluating grievance and arbitration procedures is whether the parties can avoid
a heavy caseload. The advantages of settling disputes informally or at the step
closest to the site where the problems arise are great.

In fact, although the United States has a tradition of very formal grievance
systems in unionized settings, informal practices have emerged at the workplace.
Most employee complaints are resolved informally before they become formal
grievances. A study by Lewin and Peterson, for example, found that between 16
and 40 percent of the employees in the unionized workplaces they studied reported
having discussed with their supervisors (and resolved) a problem about their
contractual rights. 15

However, a low grievance rate may be attributable to the fact that a union is
not aggressively enforcing the terms of a contract. For this reason, evaluation of

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312 Part IV. The Workplace Level of Labor Relations

the use of the grievance procedure should be accompanied by consideration of
the reasons for low use.

Time and Costs of Settling Grievances

Two criteria that are commonly used to evaluate grievance procedures are the
time it takes to settle claims and the costs associated with processing claims through
to arbitration. The original purpose in developing the procedures was to fi nd an
expeditious and inexpensive substitute for court procedures. Although the grievance
process is still shorter than litigation, the time required to resolve a grievance
through arbitration has become substantial. In 2005, the average period between
the request for an arbitrator and an award being issued was 401 days for arbitrations
administered by the FMCS. 16 To this period must be added an average of 163
days between the initial fi ling of a grievance and a request for arbitration. Although
the average length of employment litigation cases is longer, averaging two to
three years, the idea of arbitration as a simple, expeditious procedure for resolving
workplace disputes is being lost when grievances take over a year to be decided.

Similarly, the cost of arbitration can be substantial, even though it is generally
cheaper than litigation. In 2013, the average total cost of hiring an arbitrator from
the FMCS arbitrator list was $4,911.86, based on an average daily fee of $1,023.62
plus expenses and an average of four days for the hearing plus writing the award. 17
Yet hiring an arbitrator is usually only one aspect of the entire cost of resolving
a grievance-arbitration case. According to the National Labor Management
Association, when a union undertakes all of the steps in a discharge arbitration
case, it must account for the grievance process; staff time; the cost of a transcript,
hotels, and study time; and the arbitrator ’ s fee. The increasingly common use of
lawyers as representatives at arbitration, particularly on the management side,
further increases the cost of arbitration. The modern grievance procedure may
not be providing inexpensive due process, as it was intended to. At the same
time, court litigation to resolve an employment-related dispute can be extremely
expensive and is impractical for unions that have budget limitations.

The Effects of Arbitration Decisions

Another important way of evaluating grievance and arbitration procedures is what
happens after an arbitrator has reinstated a discharged employee. If the grievance
procedure is effective in carrying out industrial justice, a worker who has been
unjustly discharged should be able to return to work and both perform well in
the job and progress satisfactorily within the company.

The procedure itself, however, may work against these results in several ways.
First, the delays involved in processing a case through arbitration may lead a grievant
who has been discharged to seek alternative employment. Some reinstated employees
therefore do not return to their former jobs. Second, reinstated employees are
put back on their jobs frequently against the will of their employers, often to the
dismay of their immediate supervisors, and sometimes to the dissatisfaction of their
fellow workers. Some reinstated workers face hostility on their return to work.
Even if management, supervisors, and fellow workers make a good-faith effort
to treat the reinstated employee fairly, the employee may distrust their intentions

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Confl ict Resolution at the Workplace 313

or lack the confi dence to perform effectively. Some studies have found that
employees who have been reinstated do not fi t back into the workplace well. 18

One study showed that grievants in four fi rms later received lower job per-
formance ratings, had lower probabilities of promotion, and were more likely to
experience voluntary or involuntary turnover than employees who had not used
the grievance procedure. In addition, the study found that grievants who had
appealed their cases to the higher steps of the procedure later had more negative
performance and promotion experiences than those who had settled at the lower
steps. And employees who had won their grievances—that is, whose grievances
were found to be meritorious by either management or an arbitrator—had lower
subsequent performance ratings than those whose grievances had been denied by
management or an arbitrator. The same negative profi le of aftereffects fi t the
supervisors of grievance fi lers. Supervisors of grievance fi lers received lower
performance ratings, were less likely to get promoted, and were more likely to
experience involuntary turnover than supervisors in a comparison group. This
study suggests that grievance fi lers and their supervisors face considerable risk of
retribution for using the procedure. 19

An obvious implication of this evidence is that both management and union
representatives need to pay careful attention to what happens after a grievance is
resolved.

Even in the face of the problem of retribution, the grievance procedures serve
an important function as a common law of the shop. Management and union
representatives often learn from grievance settlements and arbitration awards the
appropriate interpretation of contract clauses and then adapt their behavior
accordingly. 20

In sum, the grievance and arbitration processes can have positive effects in
which the parties learn a better way of administering a contract or they can have
negative effects that involve retribution. Much depends on whether management
and labor representatives are committed to the goals the process was designed to
foster.

ALTERNATIVES TO THE GRIEVANCE PROCEDURE IN
THE UNION SECTOR

The costs and delays associated with the grievance procedure and arbitration have
led labor and management to develop innovative procedures designed to reduce
excessive delays and costs. Among these alternatives are several minor modifi cations
of existing practices, such as keeping grievances oral as far into the procedure as
possible to promote informal resolution, tightening time allowances at various
steps of the procedure, and agreeing that oral settlements or settlements at inter-
mediate steps of the procedure will not serve in any way as precedents.

Expedited Arbitration

Expedited arbitration is a type of grievance arbitration in which the parties
agree to speed the resolution of disputes. Expedited procedures bypass steps in
the normal grievance procedure and impose tight time limits. The specifi c features

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314 Part IV. The Workplace Level of Labor Relations

of expedited arbitration vary between contracts, but the following are some
common components:

Pre-hearing suggestions include (1) appointing a panel of arbitrators for the length of
the contract rather than working through a new list of arbitrators each time an arbitration
is scheduled; (2) appointing a permanent umpire [arbitrator] for a specifi c amount of
time (one year of the life of the agreement, for example); (3) using pre-hearing briefs
as a basis for stipulating facts and educating the arbitrator. Hearings may be expedited
by substituting tape recordings for transcripts. Post-hearing expedition includes (1)
setting a deadline for the award to be returned to the parties; (2) reducing or eliminating
the number of citings for the arbitrator to research; and (3) setting a maximum on
the length of one page for the award or establishing the maximum amount to be paid
for the decision ahead of time. 21

Labor, management, and arbitrators report positive results from expedited
arbitration procedures. A six-year review of the expedited arbitration procedure
of the Steelworkers basic steel industry system found that:

1. Oral resolution cut the cost of the average grievance arbitration case.
2. More than half the grievances were resolved before arbitration.
3. The awards almost always conformed to the time limits specifi ed.
4. The procedure has spread to other Steelworkers contracts in the aluminum,

can, copper, and metals industries. 22

Expedited arbitration appears to be one viable strategy for reducing the costs
and delays involved in many routine cases.

Grievance Mediation

Another innovation that has gained in popularity as a faster and less expensive
alternative to arbitration is grievance mediation . In this procedure, a neutral
third party is asked to mediate a dispute. The process is typically highly informal
and does not involve written transcripts, briefs, attorneys, or written opinions.
Rather, the mediator meets with the union and management and then often
conducts a series of separate meetings with each party to discern any underlying
reasons for the grievance and the possible points of compromise. The hope is
that the mediator will be able to mediate settlements in many of the disputes and
thereby reduce the frequency of arbitration. Although the decision of the mediator
is not binding on the parties, one study found that 89 percent of grievance
meditations are settled without the need for arbitration. 23

A pioneering effort to use mediation to resolve grievances before they go to
arbitration was developed and applied in the coal industry by William Ury, Jeanne
Brett, and Stephen Goldberg. 24 These authors calculated that the average cost per
arbitration case in the industry in 1985 was $1,300, whereas the average cost per
mediation case was $309—a savings of roughly $1,000 per case. In addition, over
a fi ve-year period, the average time lapse between a request for mediation and
the resolution of the case was nineteen days, considerably less time than the
average of fi fty-two days required to schedule an arbitration hearing and receive

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Confl ict Resolution at the Workplace 315

a written award. But even further testimony to the value of grievance mediation
can be found in the high levels of satisfaction with the procedure that management,
union representatives, and the miners who took part in it reported. 25

Although research supports the effectiveness of grievance mediation in resolving
grievances quickly and at a low cost, estimates suggest only about 3 percent of
all contracts contain a mediation step in the grievance procedure. In a review of
developments in this area, Peter Feuille argues that the reason for the lack of
greater adoption of grievance mediation is the relative strength and robustness of
the traditional grievance and arbitration process. 26 Indeed, the relative stability
and enduring structure of grievance and arbitration procedures in unionized
settings is a striking feature of U.S. labor relations, given the many sweeping
changes that have occurred in other areas in recent years.

CONFLICT RESOLUTION IN NONUNION SETTINGS

The absence of a union does not eliminate the need for confl ict resolution systems
in the workplace. Nonunion employers also often fi nd the need to perform this
generic industrial relations function. Over recent decades, many employers have
instituted complaint or appeal systems and other communication and confl ict
resolution procedures for their nonunion employees. These systems and procedures
are often the only direct recourse available to nonunion employees who feel they
have been treated unfairly in the workplace. However, they are also often less
consistent mechanisms for ensuring fair treatment and employee voice than union
grievance procedures.

Reasons for Adopting Nonunion Grievance Procedures

As discussed earlier, in virtually all unionized settings, grievance procedures are
established to enforce jointly negotiated collective bargaining agreements with
the strong encouragement of labor law statutes and court decisions. In contrast,
in nonunion settings, management has the sole discretion to decide whether to
establish a formal dispute resolution procedure. However, in practice, many
employers choose to establish formal grievance procedures for complaints by
nonunion employees. There are three major categories of reasons why employers
chose to do so.

First, employers may adopt nonunion grievance procedures as part of a manage-
ment strategy to improve the performance of a work force. The absence of a
union does not eliminate the need for confl ict resolution systems in the workplace.
According to Albert Hirschman ’ s theory, employees who have no effective means
to voice their discontent with any inequities they perceive may simply choose
to leave the company. 27 Such turnover can be very costly for employers, particularly
for those following strategies such as the human resource management pattern
discussed in Chapter 5 , which involve high levels of investment in the skills,
training, and capability of their employees. To the degree that confl ict resolution
systems can reduce such costly turnover, there will be an incentive for employers
to adopt them.

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316 Part IV. The Workplace Level of Labor Relations

Second, employers may adopt nonunion grievance procedures as part of union
avoidance strategies. The introduction of a union grievance procedure that allows
a union to enforce the terms of a collective bargaining agreement and provides
employees with due process is one of the major benefi ts of unionization that
unions can offer during organizing campaigns. Research has shown that arguments
based on justice and fairness are particularly effective during organizing campaigns.
Employers who can provide employees with effective nonunion grievance
procedures may reduce the desire for union representation and limit the strength
of these arguments in an organizing campaign.

Third, employers may adopt nonunion grievance procedures to reduce the
risk of litigation from employees. As we discussed in Chapter 3 , with the expansion
of employment laws in recent decades, there has been a growth in the number
of lawsuits fi led by employees and an increase in the damages awarded against
employers. Nonunion confl ict resolution systems can help reduce the risk of litigation
for employers by resolving workplace disputes before they turn into lawsuits.
Effective grievance procedures may also help reduce the danger of lawsuits by
allowing employers to identify managers who are engaging in improper or illegal
actions toward employees more quickly and take appropriate corrective measures.
Lastly, as will be discussed below, adoption of nonunion arbitration procedures
can enable employers to avoid lawsuits entirely and substitute an arbitral forum
for litigation to resolve disputes involving employment law.

Types of Nonunion Grievance Procedures

There is wide variation in the incidence and structure of nonunion dispute resolution
procedures. While at least half of nonunion fi rms have formal grievance procedures,
many continue to lack any procedures for resolving employee complaints or
appeals. Among fi rms that have adopted nonunion procedures, the structure of
these procedures varies widely.

The most basic type of procedure is the “open door” policy, under which
employees are simply invited to bring their complaint or concern to a manager
who will attempt to resolve it. More formal nonunion procedures for review of
employee grievances often specify the person (often a supervisor or lower-level
manager) to whom complaints can be brought and the person(s) (generally a
higher-level manager) to whom the employee can appeal if they are unsatisfi ed
with the initial manager ’ s decision. More sophisticated systems like this may
involve a committee or board of senior-level managers who will review and
decide the merits of an employee ’ s grievance and give the employee an opportunity
to present his or her grievance in a more formal hearing. A common feature of
these types of procedures, however, is that a manager or managers are the fi nal
decision makers, not a third-party neutral, as in union arbitration procedures.

Some nonunion fi rms have begun to adopt nonunion grievance procedures
that feature nonmanagers as decision makers. Among these types of procedures
are peer-review panels, which use fellow employees as decision makers, and
nonunion arbitration procedures, which use third-party neutral arbitrators. Both
of these types of procedures will be discussed further below.

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Confl ict Resolution at the Workplace 317

Data from the telecommunications industry reveals that dispute resolution
procedures appeared with the following frequency in nonunion establishments:
no formal procedure (49.5 percent); basic nonunion procedure (20.3 percent);
management appeals board (10.8 percent); and peer review and/or binding arbitra-
tion (19.3 percent). 28

In addition to these formal procedures for appealing grievances, some employers
have instituted alternative processes for resolving workplace confl ict, including
ombudsman offi ces, internal or external mediation, “speak up” programs, employee
counseling services, and attitude surveys and related communications programs.

Ombudsman offi ces are an interesting alternative to traditional grievance
procedures. The ombudsman is an individual a company employs to help resolve
problems, complaints, or confl icts between or among employees, supervisors, and
managers. Within the typical structure, the ombudsman reports directly to the
offi ce of the chief executive or to the head of the human resource management
department. This is done to remove him or her from the general management
chain of command. Since the ombudsman ’ s mandate is more open-ended than
the mandate for a grievance procedure, ombudsmen play a more varied role in
resolving confl icts and often handle a broader range of issues than do arbitrators
in the typical grievance procedure. Box 12.5 lists a range of functions the typical
ombudsman might perform. The fl exibility and informality with which the
ombudsman can approach this role is one of its distinct advantages. 29

Integrated Confl ict Management Systems

In recent years, a trend has emerged toward the introduction of integrated confl ict
management systems. An integrated confl ict management system uses a systematic
approach to preventing, managing, and resolving confl ict that focuses on the
causes of confl ict. The key features of an integrated confl ict management system
are provided in Box 12.6 .

Many factors are contributing to the development of sophisticated confl ict
resolution procedures. Complaints by employees against supervisors, peer disputes,
complaints that some part of a company is providing poor service, and disagreements
among work groups or teams are some of the reasons why organizations feel the
need for systematic approaches to confl ict resolution. In addition, disputes in the
workplace now include complex problems related to matters such as intellectual
property, sexual harassment, and confl icts of interest.

Why Nonunion Employees Desire Complaint Procedures

Employees in nonunion fi rms seek complaint procedures in part because they
want a mechanism they can use to challenge discharge decisions. The employment-
at-will doctrine that is used in the United States when there is no collective
bargaining agreement stipulates that both the employee and employer are free to
end the employment relationship at any time, for any reason, and without liability,
provided that the termination does not violate any laws.

As we discussed in Chapter 3 , in recent years a number of state courts have
allowed legal claims based on exceptions to the employment-at-will doctrine.

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318 Part IV. The Workplace Level of Labor Relations

BOX 12.5
Functions of an Ombudsman

• To give a personal and confi dential hearing, to defuse rage, to provide a
caring presence to those in grief about a dispute.

• To provide (and sometimes to receive) information on a one-to-one basis.
• To counsel people (confi dentially) on how to help themselves by helping

develop new options, by problem solving, by role playing.
• To conciliate (that is, to go between parties without bringing them face to

face).
• To mediate by bringing parties together face to face.
• To investigate formally or informally, with or without presenting

recommendations.
• To arbitrate or adjudicate, although this is a rare function.
• To facilitate systems or procedural changes by recommending “generic”

solutions, by providing upward feedback, by writing internal memos, by
“management consulting” with institutions, by public reports, by recom-
mendations to legislatures, and by supporting education and training.

The classic language describing most ombuds practitioners is “They may
not make, or change, or set aside any law or policy or management decision;
theirs is the power of reason and persuasion.”

Source : Mary P. Rowe, “Notes on the Ombudsman in the United States, 1986,”
Cambridge: Massachusetts Institute of Technology, 1986.

Yet even with the gradual expansion of nonunion complaint procedures and the
courts’ loosening of the employment-at-will doctrine, there is much controversy
about whether unorganized employees have an appropriate amount of due process.
The importance of this as a public policy issue continues to grow as the percentage
of the work force represented by unions declines.

Differences between Union and Nonunion Grievance
Procedures

There are important general differences between the procedures for resolving
workplace confl icts in union and nonunion workplaces. First, grievance procedures
in unionized workplaces are created and operate under rules established in collective
bargaining agreements jointly negotiated by the union and management. Nonunion
grievance procedures are designed and adopted by management and apply work
rules that an employer unilaterally makes. Second, whereas the union represents
the employee in a union grievance procedure, the employee typically must represent
him or herself under a nonunion grievance procedure. While a unionized employee
may in some situations disagree with how the union handles his or her grievance,

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Confl ict Resolution at the Workplace 319

BOX 12.6
Integrated Confl ict Management Systems

An integrated confl ict management system does the following:

• Encourages employees and managers to voice concerns and constructive
dissent early

• Integrates a collaborative problem-solving approach into the culture of the
company, encouraging direct negotiation between those involved in a dispute

• Provides options for all types of problems for all people in the workplace
• Coordinates a web of options and structures enabling problem solving across

areas and functions
• Aligns two confl ict management practices with each other and with the

mission, vision, and values of the company, thereby contributing signifi cantly
to internal culture transformation

• Is understandable to all
• Is fl exible and use friendly

Source : “Designing Integrated Confl ict Management Systems: Guidelines for Practitioners
and Decision Makers in Organizations,” report prepared by the Society of Professionals
in Dispute Resolution ADR in the Workplace Initiative, Institute for Confl ict Resolution,
ILR, Cornell University, 2002.

the nonunion employee acting on his or her own typically has no expertise in
grievance handling and does not have the negotiating power that union representa-
tion could have provided. Third, in most nonunion grievance procedures, it is
management that makes the decisions, in contrast to what happens in union
grievance procedures, where the arbitrator as a neutral third party makes the fi nal
decision. Although in recent years some nonunion grievance procedures have
included nonmanagerial decision makers such as arbitrators or peer employees,
these types of procedures are found in a small minority of nonunion workplaces.
These differences mean that the due process protections for employees in typical
nonunion grievance procedures are substantially more limited than those in union
grievance procedures.

Impact of Nonunion Grievance Procedures

It has long been recognized that employees are much less likely to use grievance
procedures in nonunion than union workplaces. However, employees may be
more willing to use nonunion grievance procedures that have some due process
protections. A study of employee usage of grievance procedures in the telecom-
munications industry found that rates of usage varied with the type of procedure.
Grievance rates are often measured as the number of grievances fi led annually
per 100 workers. Looking just at grievances about discipline decisions, in unionized
workplaces there was an average grievance rate of 5.3 for each 100 workers,

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320 Part IV. The Workplace Level of Labor Relations

whereas in workplaces with nonunion grievance procedures the average grievance
rate was 2.0 per 100 workers. In the nonunion workplaces, grievance rates were
much higher when the procedure included nonmanagerial decision makers: 2.9
per 100 workers for procedures that included peer review and 3.2 per 100 workers
for procedures that included arbitration compared to only 1.3 per 100 workers
for procedures that used only managers as decision makers. 30

Critics of nonunion grievance systems argue that an important reason why
employees make less use of such procedures is that they fear reprisals. A study
by David Lewin of the performance of grievance procedures in three high-
technology nonunion fi rms provides some support for these claims. 31 Lewin found
that compared to employees who did not fi le grievances, grievance fi lers (and
their supervisors) had lower performance ratings, lower promotion rates, and
higher rates of turnover in the year after their use of the procedure. Survey
responses from two of the fi rms indicated that approximately one-third of those
who did not fi le grievances chose not to do so because they either feared reprisals
or believed there was little chance their appeal would be successful. Thus, it
appears the grievants in these nonunion fi rms exercised their right to use these
procedures at considerable risk. If this pattern is at all representative of experiences
in other fi rms, it supports some of the critics’ arguments.

Peer Review and Union Avoidance

Confl ict resolution systems in nonunion settings may serve important functions
for both employees and employers. These procedures can be constructive additions
to a modern industrial relations system, but they can also give management a
way to control the work force and avoid a union.

Evidence shows that a number of fi rms have adopted peer review, a particular
kind of complaint-resolution procedure, because they found that it was an effective
substitute for a union. 32 In peer review procedures, review panels or boards are
established to hear employee grievances and make decisions about their merits.

In a peer review procedure, the majority of the members of the panel are peer
employees of the grievant. This process “creates two important advantages for
the use of peer review panels as union substitution mechanisms. First, because a
majority of the fi nal decision makers in the procedure are no longer members of
management, the panels promise greater neutrality in decision making. Second,
because employees are involved in the procedure, there is some substitution for
the representational function of the union in the workplace—albeit only a partial
substitute, given that the panel members are not actually presenting the grievance
on behalf of the employee.” 33

The history of nonunion grievance procedures has taken an ironic twist: what
started as a unique and highly acclaimed innovation designed to deliver due
process to employees has been transformed into an employer strategy for reducing
employees’ chances of achieving union representation and acquiring a truly
independent grievance procedure. Thus, like many other human resource manage-
ment innovations that are driven at least in part by union avoidance motives,
nonunion confl ict resolution systems are a double-edged sword.

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Confl ict Resolution at the Workplace 321

Nonunion Arbitration and Employment Laws

Use of arbitration as a fi nal step has long been a key feature of union grievance
procedures. By contrast, until recently use of arbitration in nonunion grievance
procedures was much rarer. This changed in the 1990s as employers began adopting
arbitration procedures as an alternative to litigation through the courts as a way
resolving employees’ claims based on employment laws.

Employment litigation costs increased dramatically in the 1960s, 1970s, and
1980s with the passage of various laws that protected workers, a shift in some
state courts toward recognition of some common-law protections against wrongful
dismissal, and occasional high damage awards to plaintiffs in disputes over dis-
crimination and other claims. This produced a strong desire by fi rms to reduce
litigation costs and avoid court actions where possible.

The impetus for the use of arbitration as a mechanism to avoid the risks and
costs of litigation came from a shift in the courts toward favoring arbitration as
an alternative way of resolving claims based on employment statutes. In its 1991
decision in Gilmer v. Interstate/Johnson Lane (1991), the U.S. Supreme Court ruled
that a dispute based on a statutory employment right was subject to arbitration.
Expanding upon the Gilmer decision, courts have ruled that disputes involving a
wide variety of employment rights, including cases involving discrimination based
on race, sex, age, and disability, are subject to the arbitration clauses in the
employment contracts of nonunion employers. In 2001, the Supreme Court
reaffi rmed its support for arbitration with its ruling in Circuit City v. Adams , which
upheld the enforceability of an arbitration agreement that Circuit City required
its employees to sign.

Employers that adopt arbitration procedures to resolve potential employment
law claims typically require employees to sign an agreement that they will arbitrate
potential legal claims against the employer as a mandatory condition of employment.
The potential employee can choose not to sign the arbitration agreement, but
the employer will then no longer offer the potential employee a job. For this
reason, these procedures are often referred to as “mandatory arbitration.” These
contracts are generally enforced by the courts, much as “take-it-or-leave-it”
contracts are enforced in many other areas (e.g., contracts with rental car companies
or apartment lease contracts).

In Equal Employment Opportunity Commission (EEOC) v. Waffl e House, Inc.
(2002), the Supreme Court limited the applicability of the Circuit City decision.
The Court ruled that the EEOC has the right to pursue judicial relief for a
victim of employment discrimination even when the individual has signed a
binding arbitration agreement with his or her employer. The EEOC can still seek
relief such as back pay, reinstatement, and damages for victims of employment
discrimination. Even after this ruling, the Gilmer and Circuit City decisions still
limit an employee ’ s ability to dispute unfair work rules and treatment in the courts.
Unless the EEOC pursues discrimination-related cases on behalf of employees,
which it has the resources to do in around only 1 or 2 percent of all cases,
employees can be forced to resolve an employment rights complaint through
arbitration.

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322 Part IV. The Workplace Level of Labor Relations

Mandatory arbitration spread rapidly in the wake of the Gilmer and Circuit City
decisions. Mandatory arbitration was very rare before the 1990s, but estimates
suggest that by the mid-2010s around a quarter or more of workplaces had
mandatory arbitration procedures in place. 34 The practical signifi cance of the
enforcement of mandatory arbitration clauses is that they divert employment
rights disputes, including discrimination cases, into an employer-designed arbitration
procedure. As a result, there has been much debate about the fairness of mandatory
arbitration procedures and various proposals have been made to increase their
due process protections.

Debates over Mandatory Arbitration

Advocates of mandatory arbitration argue that it provides a faster, more effi cient
mechanism for resolving employment law claims. They point to the lengthy
delays and high costs of litigating employment claims through the courts and
argue that arbitration provides a better, more accessible mechanism for resolving
these claims for both employers and employees. Comparisons fi nd that while the
average employment discrimination case takes 709 days to be resolved in the
federal court system, similar cases take an average of 361 days to resolve in arbitra-
tion. 35 Advocates argue that the simplifi ed procedures of arbitration are more
appropriate for resolving routine employment law disputes and that they retain
enough due process protections to ensure protection of the employee ’ s statutory
rights. 36

Critics of mandatory arbitration argue that employers have too much control
in such procedures, that they suffer from potentially biased arbitrators, and that
they move the adjudication of public employment law claims from the public
forum of the courts to a private forum. Since employers are the ones who design
mandatory arbitration procedures and since they offer them to potential employees
on a take-it-or-leave-it basis, critics worry that such procedures will include
features that systematically bias them in favor of the employer, such as rules
concerning who can serve as the arbitrator, limitations on access to the information
needed to resolve the claim, and restrictions on how the employee can present
his or her claim. In a colorful analogy, Katherine Stone described mandatory
arbitration agreements as a modern version of the yellow-dog contracts that many
employers required workers to sign promising that they would not join a union
until the practice was outlawed in the Norris-LaGuardia Act of 1932. 37

Another major concern of critics is that employers will have a systematic
advantage in arbitration because arbitrators will tend to favor the employer in
the hope of being selected to decide future claims. A study of employment arbitration
decisions found that where the employer had multiple cases before the same
arbitrator, the employer ’ s chances of winning the case increased by 6.2 percent
for each additional case the employer had with the same arbitrator. 38

Due Process Models and Controversies

While controversies and debates over the enforcement of mandatory arbitration
procedures continue, there have also been efforts to establish models of which

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Confl ict Resolution at the Workplace 323

due process protections should be included in arbitration procedures used to
resolve statutory claims. In 1994, the U.S. Department of Labor ’ s Commission
on the Future of Worker-Management Relations (the Dunlop Commission)
proposed a set of seven standards of fairness in nonunion arbitration:

a) A neutral arbitrator who knows the laws in question and understands the
concerns of the parties;

b) A fair and simple method by which the employee can secure the necessary
information to present the claim;

c) A fair method of cost-sharing between the employer and employee to ensure
affordable access to the system;

d) The right to independent representation if the employee wants it;
e) A range of remedies equal to those available through litigation;
f) A written opinion by the arbitrator explaining the rationale for the result;

and
g) Suffi cient judicial review to ensure that the result is consistent with the

governing laws. 39

In 1995, a task force established by the American Bar Association ’ s labor and
employment law section, which included representatives from both employer
and employee groups, developed a similar but more detailed Due Process Protocol
for arbitration procedures to resolve statutory claims. Subsequently, the American
Arbitration Association (AAA) announced that it would follow procedures based
on the recommendations contained in the Due Process Protocol in any employment
arbitration cases it administers. 40 This is important because many employers decide
that instead of developing an arbitration procedure entirely on their own, they
will contract with the AAA to provide the arbitrators and run the arbitration
hearings under its rules.

Research indicates that even when mandatory employment arbitration is
conducted under rules such as the AAA procedures, which provide more substantial
due process provisions than is the case in employer-crafted procedures, employee
outcomes from arbitration are less favorable than they are in litigation. A study
of employment arbitration cases found that the average amount award to employees
across all cases (including wins and losses) was $23,548 (in 2005 dollars). By
contrast, using the same measure, average employee recoveries in studies of federal
court case outcomes was $143,497 and in state courts $328,008. 41 Complex
research issues are involved when comparing arbitration and litigation outcomes,
but these broad comparisons suggest that employees recover much greater amounts
in the courts. This gives employers a powerful incentive to adopt mandatory
employment arbitration procedures.

The most recent controversy relating to mandatory arbitration is the inclusion
of class-action waivers in arbitration agreements. In AT&T v. Concepcion (2011), 42
the Supreme Court ruled that an arbitration clause could require that any case
be brought individually, effectively barring the plaintiff from participating in a
class action. Although this case dealt with a consumer claim, it has also been
applied in employment cases. This ruling give employers a way to use employment

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324 Part IV. The Workplace Level of Labor Relations

contracts to protect themselves from class actions if they include a class-action
waiver in the arbitration agreement they require their employees to sign.

There is currently uncertainty about the effect of class-action waivers in employ-
ment arbitration agreements due to an NLRB decision in the case of D. R.
Horton, Inc. (2012). 43 Under section 7 of the NLRA, employees have the right
to engage in concerted action for mutual aid and protection. In its D. R. Horton
decision, the NLRB held that the employment arbitration agreement the employer
had required had violated the employees’ right to engage in concerted action by
fi ling a class action and that because of this, the class-action waiver was unenforce-
able. Subsequent circuit court decisions have split on whether to accept the
NLRB ’ s interpretation that the employees’ section 7 rights preclude enforcement
of class-action waivers. It is likely that a Supreme Court ruling will be necessary
to resolve this confl ict. This case illustrates how issues of labor relations are
increasingly spilling over into the realm of nonunion employment relations and
employment laws.

Summary

Grievance procedures historically have been the centerpiece of the day-to-day
administration of the collective bargaining agreement. The grievance procedure
provides a mechanism for settling disputes that arise during the term of a collective
bargaining agreement. The grievance procedure typically includes steps involving
successively higher-level union and management offi cials. The union has the right
to decide if it wishes to push an unsettled grievance to a higher step.

The grievance procedure has been hailed as one of the most innovative features
of the U.S. industrial relations system. The centrality of the role it played in the
past is attributable in part to the understanding that it was management ’ s job to
manage and the union ’ s job to grieve.

Collective bargaining agreements in the United States are elaborate documents
that often include highly detailed job descriptions. The existence of such elaborate
labor contracts contributed to the need for an orderly way of settling confl icts
over interpretations of contract language.

Binding arbitration by a third party is the common device used as the fi nal
step of grievance procedures. Arbitrators commonly consider past practice at the
workplace, the intent of the parties during contract negotiations, and fairness
when they fashion awards. In discipline cases, arbitrators generally require progressive
and corrective discipline.

The centrality of formal grievance and arbitration procedures is now being
challenged by recent developments. The combination of a need for greater adapt-
ability and competitive pressures has led some unions and managements to simplify
how confl icts are settled. The expansion of workers’ involvement in business and
strategic decisions has led labor and management to rely less on the grievance
procedure to solve problems. An effective industrial relations system in union
settings now must be more than simply a grievance procedure. To keep in step
with the times, the system must combine the strengths of a well-functioning

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Confl ict Resolution at the Workplace 325

grievance procedure with mechanisms for solving problems informally and for
improving communication.

Confl ict resolution procedures are also important in the nonunion workplace.
Employers are motivated to adopt them for a number of reasons, including
reducing turnover, avoiding unions, and avoiding litigation. Nonunion confl ict
resolution procedures come in a greater variety of forms than union grievance
procedures. Some include structures such as peer review panels and ombudsman
offi ces.

Mandatory arbitration of employment claims is a growing and controversial
practice in the nonunion workplace. Mandatory arbitration agreements that
employers impose as a condition of employment effectively bar employees from
going to court and require them to arbitrate all disputes with the employer, even
claims under statutes such as Title VII of the Civil Rights Act.

Advocates argue that arbitration of employment disputes is faster, cheaper, and
more accessible for employees. Critics note that mandatory arbitration is unilaterally
imposed by employers and often lacks due process protections. they point to
empirical evidence that it produces worse outcomes for employees than litigation
and is plagued by problems such as bias in favor of employers when the employer
uses the same arbitrator repeatedly. Recent concerns have focused on the enforce-
ability of class-action waivers in mandatory arbitration agreements.

Discussion Questions

1. Describe the typical steps followed in a grievance case.
2. Name the groups the grievance process meets the needs of and discuss how

the grievance arbitration procedures help meet their respective needs.
3. What are some of the alternatives to the grievance arbitration process in

unionized workplaces?
4. What are some of the techniques nonunion fi rms use to resolve confl ict?
5. Describe the debates concerning whether nonunion arbitration procedures

should be used to resolve disputes about employment laws.

Related Websites

Federal Mediation and Conciliation Service:
http://www.fmcs.gov

American Arbitration Association:
http://www.adr.org

Suggested Readings

Elkouri , Frank , and Edna Asper Elkouri . How Arbitration Works . 7th ed . Washington, D.C. :
Bureau of National Affairs , 2012 .

Lipsky , David , Ronald Seeber , and Richard Fincher . Emerging Systems for Managing Workplace
Confl ict . San Francisco : Jossey-Bass , 2003 .

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326 Part IV. The Workplace Level of Labor Relations

Kuhn , James W. Bargaining and Grievance Settlement . New York : Columbia University Press ,
1961 .

Lewin , David , and Richard Peterson . The Modern Grievance Procedure in the American Economy .
New York : Quorum Books , 1988 .

McKelvey , Jean T. , ed . The Changing Law of Fair Representation . Ithaca, N.Y. : ILR Press ,
1985 .

Notes

1. United States Industrial Commission, Final Report of the Industrial Commission (Washington:
Government Printing Offi ce, 1902).

2. For a more thorough review of the development of grievance arbitration, see Robben W.
Fleming, The Labor Arbitration Process (Urbana: University of Illinois Press, 1964).

3. Charles C. Killingsworth and Saul Wallen, “Constraint and Variety in Arbitration Systems,”
in Labor Arbitration-Perspectives and Problems: Proceedings of the National Academy of Arbitrators, 1964
(Washington, D.C.: Bureau of National Affairs, 1965), 56–81.

4. Agreement between General Motors Corporation and the UAW, October 8, 1987 (N.p.: n.p., 1987),
93–94.

5. Neil W. Chamberlain and James W. Kuhn, Collective Bargaining , 3rd ed. (New York: McGraw-
Hill, 1986), 151–153.

6. United Steelworkers of America v. Warrior and Gulf Navigation , 363 U.S. 547 at 581 (1960).
7. Steele v. Louisville & Nashville R.R. Co. , 323 U.S. 192 (1944).
8. Vaca v. Sipes , 386 U.S. 171 (1967).
9. Hines v. Anchor Motor Freight, Inc. , 424 U.S. 554 (1976).
10. Bowen v. United States Postal Service , 103 U.S. (1983).
11. James T. Turner and James W. Robinson, “A Pilot Study of the Validity of Grievance Settle-

ment Rates as a Predictor of Union Management Relationships,” Journal of Industrial Relations 14
(September 1972): 314–322.

12. Harry C. Katz, Thomas A. Kochan, and Kenneth R. Gobeille, “Industrial Relations Performance,
Economic Performance, and QWL Programs: An Interplant Analysis,” Industrial and Labor Relations
Review 37 (October 1983): 8–9.

13. Nancy R. Mower, “The Labor-Management Relationship and Its Effects on Quality of Work
Life” (M.S. thesis, Massachusetts Institute of Technology, 1982).

14. James W. Kuhn, Bargaining in Grievance Settlement (New York: Columbia University Press,
1961).

15. David Lewin and Richard Peterson, The Modern Grievance Procedure in the United States (New
York: Quorum Books, 1988).

16. Federal Mediation and Conciliation Service, Arbitration Statistics, Fiscal Year 2005,
www.fmcs.gov .

17. Federal Mediation and Conciliation Service, Arbitration Statistics, Fiscal Year 2013,
www.fmcs.gov .

18. Arthur M. Ross, “The Arbitration of Discharge Cases: What Happens After Reinstatement?”
in Critical Issues in Arbitration: Proceedings of the Tenth Annual Meeting of the National Academy of Arbitrators
(Washington, D.C.: Bureau of National Affairs, 1957), 21–56; Robert C. Rodgers, I. B. Helburn,
and John E. Hunter, “The Relationship of Seniority to Job Performance Following Reinstatement,”
Academy of Management Journal 29 (March 1986): 101–114.

19. Lewin and Peterson, The Modern Grievance Procedure in the United States.
20. Thomas R. Knight, “Feedback and Grievance Resolution,” Industrial and Labor Relations

Review 39 (July 1986): 585–598.
21. Nancy Kaufman, “The Idea of Expedited Arbitration Two Decades Later,” Arbitration Journal

(September 1991): 34–38.
22. John Zalusky, “Arbitration: Updating a Vital Process,” American Federationist 83 (November

1976): 4.

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Confl ict Resolution at the Workplace 327

23. Jeanne M. Brett and Stephen B. Goldberg, “Grievance Mediation in the Coal Industry: A
Field Experiment,” Industrial and Labor Relations Review 37, no. 1 (1983): 49–69.

24. William L. Ury, Jeanne M. Brett, and Stephen B. Goldberg, Getting Disputes Resolved: Designing
Systems to Cut the Costs of Confl ict (San Francisco: Jossey-Bass, 1988).

25. Stephen B. Goldberg, “The Mediation of Grievances under a Collective Bargaining Contract:
An Alternative to Arbitration,” Northwestern University Law Review 77 (October 1982): 270–315.

26. Peter Feuille, “Grievance Mediation,” in Employment Dispute Resolution and Worker Rights in
the Changing Workplace , ed. Adrienne E. Eaton and Jeffrey H. Keefe (Champaign-Urbana, Ill.:
Industrial Relations Research Association, 1999): 187–217.

27. Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations,
and States (Cambridge, Mass.: Harvard University Press, 1971).

28. Alexander J. S. Colvin, Citizens and Citadels: Dispute Resolution and the Governance of Employment
Relations (PhD diss., Cornell University, 1999).

29. David Lewin, “Workplace Dispute Resolution,” in The Human Resource Management Handbook,
Part II , ed. D. Lewin, D. J. B. Mitchell, and M. A. Zaidi (Greenwich, Conn.: JAI Press, 1997),
197–218.

30. Alexander J. S. Colvin, “The Dual Transformation of Workplace Dispute Resolution,”
Industrial Relations 42 (October 2003): 712–735.

31. David Lewin, “Confl ict Resolution in High Technology Firms,” in Human Resource Management
in High Technology , ed. Archie Kleingartner and Cara Anderson (Lexington, Mass.: Lexington Books,
1987).

32. Alexander J. S. Colvin, “Institutional Pressures, Human Resource Strategies and the Rise of
Nonunion Grievance Procedures,” Industrial and Labor Relations Review 56 (April 2003): 375–392.

33. Ibid., 380.
34. Alexander J. S. Colvin and Mark Gough, “Individual Employment Rights Arbitration in the

United States: Actors and Outcomes,” ILR Review 68, no. 5 (2015): 1019–1042.
35. Alexander J. S. Colvin, “An Empirical Study of Employment Arbitration: Case Outcomes

and Processes,” Journal of Empirical Legal Studies 8, no. 1 (2011): 1–23.
36. Samuel Estreicker, “Saturns for Rickshaws: The Stakes in the Debate over Predispute Employ-

ment Arbitration Agreements,” Ohio State Journal on Dispute Resolution 16 (2001): 559–570.
37. Katherine V. W. Stone, “Mandatory Arbitration of Individual Employment Rights: The

Yellow Dog Contract of the 1990 ’ s,” Denver University Law Review 73 (1996): 1017–1050.
38. Colvin and Gough, “Individual Employment Rights Arbitration in the United States.”
39. Commission on the Future of Worker-Management Relations (The Dunlop Commission),

Report and Recommendations (Washington, D.C.: U.S. Department of Labor, 1994).
40. “Revised AAA Arbitration Procedures Refl ect Due Process Task Force Scheme,” Daily Labor

Report , May 28, 1996.
41. Colvin, “An Empirical Study of Employment Arbitration.”
42. 563 U.S. 333 (2011).
43. 357 NLRB No. 184 (2012).

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