The Employee Free Choice Act is the most important labor law reform in 50 years and is essential to creating fair negotiations between workers and management. One of its most-needed provisions calls for arbitration in cases in which newly unionized employees cannot get their employer to agree to a contract. Although this first-contract arbitration provision has gotten less attention than the provisions that would reduce coercion in choosing a union by requiring an employer to recognize signed authorization cards, it is equally important to fair treatment of workers.
If employees vote to unionize, it is left to their union and management to negotiate a collective bargaining agreement. The problem is that federal law does not require the employer to ever reach agreement with the union. The federal agency that protects the rights of workers has no power to prevent or punish refusals to reach a bargain. Consequently, employers can and do frequently refuse to enter into a contract and insist on unilaterally dictating terms of employment because they know that, without a contract, support for the union will eventually melt away. During the past decade, nearly half of all newly certified unions failed to reach a first contract within a year, and one-quarter of new unions did not have a contract after three years of bargaining. That means that the workers who exercised their right to select union representation never got what the law guarantees them: collective representation in establishing wages and working conditions.
One provision of the Employee Free Choice Act would rectify this problem by providing for arbitration in the case of a failure to bargain to a first contract. Neutral third-party involvement in resolving bargaining disputes has a long and illustrious history in American labor relations, for good reason: It works. It is widely used to resolve negotiating disputes in the public sector, in transportation and even in salary disputes in Major League Baseball. It is also used successfully in Canada.
Employer groups today insist that strikes are preferable to arbitration as a way to resolve bargaining disputes. This is because the law allows employers to permanently replace striking workers which, of course, is another way to get rid of the union. No wonder that strikes today are very rare.
But when labor is scarce and employers cannot replace striking workers, strikes are more common, and employers tend to oppose strikes and prefer third-party resolution of bargaining disputes. For example, when a bargaining dispute shut down West Coast ports in 2002 and the line of ships waiting to dock stretched miles into the Pacific Ocean, companies complained bitterly about the harm to the U.S. economy of resolving bargaining disputes through economic force. President Bush sought and obtained an injunction against the labor dispute, which then triggered third-party involvement in negotiating a settlement. At that time, business groups complained that the use of strikes endangered the health of the economy by disrupting the flow of commerce and endangered national security by tying up the principal arteries of commerce. Arbitration is not necessarily pro-labor: It prevents both management and labor from exploiting each other in negotiations.
Now the U.S. Chamber of Commerce argues against arbitration. Its main substantive argument is that arbitration will undermine the negotiating process by prompting either management or the union to make unreasonable demands in bargaining in the hopes of the arbitrator choosing their side. But there is a simple expedient to address this problem, one that is widely used in public-sector labor negotiations and baseball salary disputes: Require the arbitrator to choose one of the parties' final offers. This forces the parties to make reasonable offers in the hopes that, if the other side does not agree, the arbitrator will choose theirs.
First-contract arbitration will end the widespread employer practice of flouting the duty to bargain, talking a union to death and acting with impunity in defeating the employees' choice of unionization. It will have no effect on law-abiding employers that negotiate in good faith to reach an agreement with their employees. It will only affect those employers that refuse to enter into a collective bargaining agreement in a reasonable time after initial union certification; it will allow for an initial contract for only two years, and it will do so through neutral and expert arbitration. Republicans have filibustered every labor reform for 50 years; it is time to end the filibuster and enact this simple and sensible reform.
Catherine Fisk is Chancellor's Professor of Law at the University of California, Irvine School of Law and author of Working Knowledge: Employee Innovation and the Rise of Corporate Intellectual Property (University of North Carolina Press, forthcoming in August).
