What will binding arbitration do to your rights?
In addition to eliminating workers’ right to a secret ballot, the Employee Free-Choice Act’s (EFCA’s) arbitration clause undermines workers’ right to have the final say over the terms and conditions under which they work. Instead, EFCA transfers that power in many cases to unaccountable government arbitrators with no stake in a workable outcome.
Current Labor Law:
- Grants workers the final say in deciding whether to accept or reject contract terms offered by employers during the bargaining process.
- Section 8 of the National Labor Relations Act (NLRA) requires both employers and employee representatives to meet and bargain “in good faith with respect to wages, hours, and other terms and conditions of employment.
- "Critically, however, Section 8 provides that “such obligation does not compel either party to agree to a proposal or require the making of a concession.”
- This safeguards the principle of mutual consent and free choice by allowing workers to reject terms they ultimately cannot accept.
EFCA’s Proposed Arbitration Clause:
- Replaces the will of workers with the whims of government arbitrators.
- Section 3 of EFCA empowers government arbitrators to unilaterally “render a decision” after just 120 days of bargaining, thereby dictating contract terms upon workers and employers alike.
- Since most contract negotiations exceed 120 days, the breathtaking toxicity of these arbitration provisions is obvious.
Other Consequences of Arbitration Clause:
- Workers and employers will have less motivation to negotiate reasonably. Instead, they will have an incentive to submit extreme proposals to the arbitrator, in the hope that the arbitrator will split the baby and choose some “middle ground.”
- Workers may be forced to participate in dangerously underfunded multi-employer union pension plans.
- Drags out contract settlement, as states like Michigan that have imposed mandatory arbitration rules witnessed the average period exceed fifteen long months. This leaves both anxious workers and strapped employers in a precarious holding pattern.
- Fails to identify how arbitrators will be appointed, which opens the door to further uncertainty and governmental mischief.
- Harms the broader American economy. Whereas workers and employers have a mutual stake in ensuring a workable agreement, unaccountable government arbitrators who parachute in to dictate agreements suffer no consequence from sending businesses into ruin.
- A quantitative study by Dr. Anne Layne-Farrar of the Social Science Research Network concludes that EFCA may cost 600,000 jobs in just one year.
- Workers can no longer terminate the negotiation process or decertify unions that forfeit employees’ trust during negotiations.
The Alliance for Worker Freedom sent the following letter to all Members of Congress, Secretary of Labor Hilda Solis, and President Obama warning of the dangerous arbitration clause in S. 560 / H.R. 1409, the Employee Free Choice Act (EFCA). Despite rumors that the "card check" provision may be removed from EFCA, AWF continues to focus on the negative impact this legislation will have on the relationship between employers and employees.
22 July 2009
TO: All Members of the U.S. Senate
RE: Employee Free-Choice Act’s arbitration clause leaves workers powerless in employee-employer negotiations
Dear Senator:
On behalf of the Alliance for Worker Freedom (AWF), an organization established in 2003 to combat anti-worker legislation and promote free and open labor markets, I would like to urge you to oppose the Employee Free-Choice Act (EFCA), specifically, its binding arbitration clause.
Arbitration, in its most basic form, is a tool used by two parties (in this case unions and employers) to resolve disagreements on contracts, benefits, responsibilities, or any number of issues. Usually arbitration is reserved as a means to resolve disputes between two previously contracted parties outside of a formal court room. The parties arbitrate disputes that arise out of the contract that binds them (i.e. a union contact).
It is very rare to create a new contractual agreement where none previously existed through arbitration. Arbitration is a last resort for labor and business if common ground cannot be found. EFCA will fundamentally change the arbitration process, shifting the power from private business and workers to a partial governmental entity (i.e. a government appointed arbitrator).
Current arbitration legislation is founded on the principle of mutual consent. Section 8 of the National Labor Relations Act (NLRA) requires both employers and employee representatives to meet and bargain “in good faith with respect to wages, hours, and other terms and conditions of employment,” correctly encouraging negotiating members to compromise. Mandating governmental intervention changes the rules of the game, and thus, how negotiations will take place.
The current form of “good faith bargaining” that occurs during present-day arbitration is preferred by both parties. This prevents each side from going to extremes and saves both parties time and money by incentivizing a good faith effort outside the courtroom.
Under proposed EFCA law, negotiations between labor and business parties cannot exceed 120 days. If they do, a government arbitrator enters the dispute and imposes a binding ruling upon both parties. A 120 day timeline is an important number because nearly all negotiations last longer than this. EFCA means the majority of labor disputes will end up being resolved by the government, a non-interested third party, and not the employees and employers.
With EFCA, the threat of government arbitrators creates faulty incentives that deter consent among negotiating parties. The perceived power labor unions have encourages them to propose radical conditions. Unions do this not in the interest of finding agreement but to make it impossible for employers to accept their terms, forcing government arbitration which will likely favor unions.
EFCA creates a negotiating environment that is hostile and non-cooperative in nature. This undermines Section 8 of the NLRA. NLRA does not force arbitration, meaning both sides have to meet halfway; otherwise all parties suffer if business cannot continue.
EFCA leaves too many questions about arbitrators unanswered while simultaneously giving them unheard of power. Additionally, there is no provision that lays out how arbitrators will be chosen; leaving questions about qualifications and bias.
This leaves room for the most obvious abuse, a biased arbitrator. Both business and labor contribute millions of dollars to various political movements; it is not hard to imagine a scenario where an arbitrator is pressured to rule in favor of one party over another. Unlike workers and employees, who are accountable to their shareholders and judged by the success of their business, arbitrators will have little at stake when ruling, making the bias arbitrator situation all the more probable.
Given the lack of details about the qualifications of potentially government appointed arbitrators, it is shocking how much power they are given under EFCA. Arbitrators will have the ability to dictate any aspect of business, from wages to promotions and retirement plans. Arbitrators can even decide what type of equipment companies can use.
EFCA laws do little to foster consensus, only empower interest groups. NLRA arbitration, which has worked for years, gives both negotiating sides equal opportunity to present an argument and enter negotiations with reasonable goals in mind. NLRA, Section 8, provides that “such obligation does not compel either party to agree to a proposal or require the making of a concession,” assuring that both workers and employers cannot be coerced to agree on a deal that is one sided.
Current law empowers workers who can choose to reject, or accept, any contract offered by their employers. EFCA does not. I urge you to reject EFCA and protect worker freedom.
Sincerely,
Brian M. Johnson, MPA
Executive Director
cc:President Obama, Secretary of Labor, the Honorable Hilda Solis, All U.S. House of Representative Members
Comments (1)
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As soon as the government decides to insert themselves into the private discussions of two people, it is inappropriate. Binding arbitration is when the government decides that you should be forced to accept what the bureaucrats want you to accept. People should be allowed to not sign a contract that is written by union bosses.
>> Jeffrey Hosten September 15, 2009 15:02 pm
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