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Big Business Likes Arbitration — If It Can Control the Process

Opponents of the Employee Free Choice Act, desperate in their efforts to kill the proposed legislation that would level the playing field for workers seeking to form unions, have come up with another line of attack. They are making a lot of noise over the bill’s arbitration provision. The argument is just another straw-man attempt at gutting legislation that would enable more workers to have a voice on the job. (And one more sign of desperation—to wit, the trotting out of widely loathed figures like Dick Cheney and Karl Rove to attack the Employee Free Choice Act.

Here’s the deal. Even after employees select a union to represent them, they need to bargain a first contract. But there’s no incentive for management to bargain in good faith. The longer contract negotiations are dragged out, the less likely one will ever be settled. In fact, nearly half of workers are denied a first contract, even when they’ve won their union.

So, the Employee Free Choice Act provides that when an employer and newly formed union are unable to bargain a first contract within 90 days, either party can request mediation by the Federal Mediation and Conciliation Service (FMCS). If no agreement has been reached after 30 days of mediation, the dispute is referred to binding arbitration. All time limits can be extended by mutual agreement.

This change eliminates current incentives for employers to delay and stall negotiations and will dramatically reduce the delay, frustration and animosity generated by the company-dominated system. Thomas Kochan, professor at Massachusetts Institute of Technology’s Sloan School of Management says the process could be set up to allow for a neutral arbitrator, an employer-chosen arbitrator and a union-chosen arbitrator.

We can design a fair process.

Because all too often what workers experience when trying to negotiate a first contract is what’s happening right now to Johanna Moon. The 25-year veteran of Trump Plaza in Atlantic City and her colleagues joined the UAW two years ago, but still do not have a contract. The workers formed a union because, despite many years on the job, they were living paycheck to paycheck and some had no health coverage. If the Employee Free Choice Act was law, these workers would have a contract. Clearly, they need one badly.

As usual, opponents of Employee Free Choice are out of sync with Main Street America. According to new public polling conducted by Hart Research Associates and commissioned by the AFL-CIO, 61 percent of the public supports first-contract arbitration.

In fact, Big Business supports arbitration as well—as long as the boss controls the process. An issue paper from the U.S. Chamber of Commerce Institute for Legal Reform states: "Virtually any type of dispute between private individuals or entities can be addressed by arbitration, including, for example, contract, real estate, employment and tort disputes." In October 2008, The New York Times reported on a study that found businesses used mandatory arbitration in 75 percent of consumer agreements but just 24 percent of contracts overall, showing they were used to prevent class-action lawsuits. (H/t to Michael Whitney at SEIU.)

The Chamber of Commerce knows arbitration works for business—and it doesn’t want the same for America’s workers.

By giving workers the choice to request mediation and arbitration, the Employee Free Choice Act guarantees that every worker who forms a union will get a contract. Likewise, by giving workers the choice to request mediation and arbitration, the Employee Free Choice Act eliminates the incentive for employers to bargain in bad faith.

And that’s why Big Business doesn’t want it.

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Tula Connell

Tula Connell