The History and Future of Labor Arbitration Process - Essay Example

The History and Future of Labor Arbitration Process Introduction Labor arbitration is one of the widely accepted methods of labor dispute resolutionworld wide. Labor arbitration as a means of finding solution to labor problems succeeded in many instances in the history of labor relations. In fact, labor arbitration has a place of prominence in the labor relations of business and non-business organization across the world. Arbitration is the process by which parties in the dispute agree to submit their problems to an independent neutral third party, known as arbitrator. Arbitration has many forms, but labor arbitration is the most common dispute resolution method to find workable solution to labor problems. Another common way of dispute resolution is mediation. It also involves the role of one mediator, but his role is more of a compromiser than a final decision maker. An arbitrator attempts to resolve a dispute by hearing from both management and workers to arrive an amicable solution, which is binding on both parties. The role of a mediator is facilitating the communication between deputed parties to find a solution by themselves in the presence of mediator. Rarely does the mediator exert pressure to accept a solution. Conciliation is another way out for labor problems, but it is more or less same as that of mediation. Today, arbitration is used worldwide as a mechanism of resolving labor problems, and indeed in many other areas. The common forms of arbitration can be defined as below (Arbitration and Mediation): "Compulsory arbitration is a dispute resolution that is required by law. Widely accepted in Australia and New Zealand, compulsory arbitration was practiced by the National War Labor Board during World War II. It is a binding process. Expedited arbitration is a process intended to speed up the arbitration process with an informal hearing and awards generally rendered within five days. It was first used in 1971 in settling disputes in the steel industry. Expedited arbitration was als6 designed as a cost-saving method of dispute resolution. Interest arbitration is the use of an arbitrator or arbitrator board to render a binding decision in resolving a dispute over new contract terms (also called non-justifiable arbitration). Final offer selection arbitration is an interest arbitration process in which the arbitrator or arbitrator board selects either the union or management proposal to the solution. There can be no compromised decisions. This process is also termed either-or arbitration. Tripartite arbitration is a process wherein a three-member panel of arbitrators is used to reach a decision. Both labor and management select an arbitrator and the third is selected by the other two arbitrators or the parties to the dispute as a neutral participant". This essay is an attempt to review the history and future of labor arbitration in the United States, about which there have been many misconceptions. The essay attempts to clarify this much debated issue in a simple and lucid manner and to give an idea about the role of labor arbitration in labor relations. Secondary sources such as internet alone is used to justify the main arguments. History of Labor Arbitration in the U.S. This is a much debates and controversial topic in the United States. There are many misconceptions about the evolution of labor arbitration process in the country. The history of arbitration as a dispute resolving mechanism dates back to English common law and is the oldest form of dispute settlement. There were many instances of the use of arbitration in olden days. Among them the most notable are- "King Solomon was an arbitrator and arbitration was used to settle differences during the Greco-Roman period. George Washington was an advocate of arbitration and, in his will, mandated using the process if disputes arose over his estate. The use of arbitration in labor disputes was a common practice in the late 19th century but developed more rapidly after World War II as a substitute for work stoppages. During World War II, the National War Labor Board gave great impetus to the use of arbitration. The board heard over 20,000 labor disputes during the war and frequently mandated that future cases employ arbitration. The president's National Labor-Management Conference of 1945 also recommended the application of the arbitration process to settle labor disputes". (Arbitration and Mediation, 2000). In the United States, studies have shown that the number of collective bargaining agreements that suggest arbitration as a labor dispute mechanism is on the high. Massey V. Robert Jr. opined in his report that "By 1944 the Bureau of Labor Statistics showed that 73% of all labor contracts in America contained arbitration clauses and by the early 1980's that figure had grown to 95%. Today, 98% of all collective bargaining agreements in the United States contain arbitration clauses". Arbitration as a method of dispute resolution has been used by not only business organization, but federal government as well for over a century. The Interstate Commerce Act passed in 1887 had a voluntary arbitration clause for workers in the Railroad industry. Further, the Federal Arbitration Act (FAA), and Civil Rights Act had stressed the need for arbitration, which became a great fillip for the use of arbitration in the country. In the present labor arbitration scenario, arbitration is widely used in the country. The popularity is expanding year after year. In fact, arbitration has become a means of clearing up of the over crowded court in the country. The country takes over 70,000 grievance and interest arbitration cases each year. American Arbitration Association (AAA), one of the popular arbitration organizations has 800 employees in 35 offices worldwide and represents over 8000 arbitrators and mediators across the world. AAA arbitration has administered over 2 million cases in the last 75 years. With that great success, arbitration has gone beyond the industrial relations. In the year 1996, it was implemented for Olympic Athletes, and there was a grievance over the test result, which was solved using this mechanism. In the words of economists, these success stories indicate that arbitration will become one of the fastest industries in the country. "According to a 1994 study conducted by the Society for Human Resource Management, 88 percent of unionized firms had used arbitration to settle disputes, but fewer than 8 percent of non-unionized companies surveyed used arbitration as a general rule. Of the firms that had used the arbitration process, more than half had concluded that arbitration reduced legal fees. In addition, many companies (40 percent) said attorney fees and settlement costs had been reduced. Other survey findings included that larger companies were more likely to have used arbitration than smaller firms. Employees had input into the design of the arbitration system in 11 percent of the surveyed companies, while 55 percent of the companies reported that arbitration design was included in their collective bargaining agreements. Nonbinding arbitration was used only 8.3 percent of the time in union settings but was more widely used in non-unionized firms (30 percent). The selection of an arbitrator generally involved use of a roster maintained by the AAA, but other methods included an in-house arbitrator and the use of an in-house panel selected by the union and management" (Arbitration and Mediation, 2000). The Future of Labor Arbitration in the U.S The present instances the world over reveal that the development of arbitration as a favored mode of dispute resolution is at a faster rate than ever before. It has grown from nowhere to become the panacea for disputes beyond labor relations over the last few years. Nowadays judges suggest this method as a lasting solution to labor and other problems. "In California, at least, numerous judges have quit their careers on the bench for more remunerative positions with professional mediation and arbitration service providers" (The Future of Arbitration- Some Thoughts, n.d.). The present array of events and the supports of authorities and public are an indication that there is a bright future for mediation and arbitration. Finding new and more effective ways of providing these services to meet the needs of people in an even greater array of human transactions is clearly a worthwhile pursuit from both a social and economic viewpoint. A recent study conducted in the United States of America (Minn.2004) among the attorneys came out with the following results, showing that arbitration is becoming more and more popular. "Nearly all (86.2%, 89.4%) believe that their "clients' interests are sometimes best served by offering ADR (Alternate Dispute Resolution)solutions," More than half (56.8%, 60.5%) say that they will most likely offer "ADR solutions to clients in the future," A large percentage (63.2%, 59.8%) think that "offering clients ADR solutions is an ethical obligation as a practitioner," and A majority (66.2%, 59.8%) trust "ADR use to increase in the future." Conclusion Arbitration is one of the oldest forms of dispute resolution in the history of the world. Certainly, it is not a phenomenon of the twentieth century nor is it an American invention. It has been widely accepted as a mode of conflict resolution in the workplace in the unionized and non-unionized settings. The scope and utility of Arbitration is not restricted to labor management relations. It has grown beyond the four walls of factory and generally accepted as a conflict resolution mechanism to speed up the process and to free the parties from troubles. It is becoming popular among the attorneys and judges that they view arbitration as a mechanism to clear up the over crowded courts and has a bright future as a growing service industry across the world. References Arbitration and Mediation (2000). Encyclopedia of Business, eNotes.com. Retrieved December 5, 2008, from http://www.enotes.com/biz-encyclopedia/arbitration-mediation Massey. Jr. & Robert V(n.d.) History of Arbitration and Grievance Arbitration in the United States-West Virginia University Extension Service Institute for Labor Studies and Research. Retrieved December 6, 2008, from http://72.14.235.132/searchq=cache:XbX09MpFnisJ:www.wvu.edu/exten/depts/ilsr/arbitration_history.pdf+History+of+Arbitration+and+Grievance+Arbitration+in+the&hl=en&ct=clnk&cd=1&gl=in Minn, Minneapolis (2006). New Surveys Show Attorneys Favor Use of Alternative Dispute Resolution. National Arbitration Forum. Retrieved December 6, 2008, from http://www.adrforum.com/newsroom.aspx&itemID=998&news=3 The Future of Arbitration- Some Thoughts (n.d.). Dennisquade. Retrieved December 6, 2008, from http://72.14.235.132/searchq=cache:sewYpXbd990J:www.adrforum.com/rcontrol/documents/ResearchStudiesAndStatistics/2002QuadeFutureOfArbitration.pdf+FUTURE+OF+ARBITRATION&hl=en&ct=clnk&cd=1&gl=in Read More