CRITICAL CONTRACT CLAUSES (#3) – Creative Arbitration Provisions
Every federal sector contract has an arbitration clause, but a lot of them have not changed much in decades despite a raft of problems with the process, e.g., slow arbitrators, FLRA reversals of arbitrators, refined agency delay tactics, etc. Consequently, we want to share some thoughts on how to modernize these lumbering dinosaurs among the contract clauses.
The Other Reopener Clause– Many contracts contain language permitting the union to reopen the contract about halfway through its term to fix a small number of issues, and a few even allow the union to reopen if a clause is declared illegal or unenforceable during the life of the agreement. But very few give the union the right to reopen an arbitration decision if FLRA reverses the arbitrator. For example, suppose the union grieves a member’s non-selection for promotion, the arbitrator awards retroactive promotion and then pursuant to exceptions filed by management the FLRA rules the retroactive promotion remedy is illegal. Does the union have the right to go back to the arbitrator to give him/her a chance to correct the flaw in his/her analysis or to award an alternate remedy, such as priority consideration? Or is that employee simply out of luck due to something like the arbitrator making a mistake in how he/she drafted the decision? The answer is that “it depends” and that “it is totally up to the FLRA” whether to give the union the right to seek a corrected or alternative award. Nothing in the law requires it to remand the case back to the arbitrator for reconsideration and an alternative remedy. In fact, in its early days (NAGE, 39 FLRA 692 (1991)) FLRA refused to remand ever. (More recently, PASS, 66 FLRA 441 (2012) is a good example of the Authority rejecting the arbitrator’s remedy without ordering the case be remanded to the arbitrator for revisions consistent with the FLRA reasoning. Another case, AFGE, 57 FLRA 77 (2002), reveals an additional FLRA wrinkle, namely, FLRA remanded the case to a different arbitrator than heard the case originally.
Consequently, it seems to us that a union should propose language permitting any arbitrator decision reversed by the FLRA to be remanded and the procedures for doing that. Why run the risk that FLRA will suddenly return to the days of not ordering remand or that it will find some new theory for denying remand in some cases.
The Early Invocation Clause– Many grievances involve violations of federal law or regulations or back pay claims. It seems to us that the union has a good argument that it should be permitted to invoke and schedule those cases for arbitration simultaneous with filing the grievance. For example, suppose the union alleges that the agency has assigned shifts in violation of 6 USC 6101 as well as 5 CFR 610 and asked that the harmed employees be awarded overtime pay as a remedy. If that case takes two years to get through arbitration and the agency loses, its retroactive pay costs could easily exceed a million dollars. Consequently, it seems to us that the agency has as much of an interest in a quick resolution as the union. One approach would be to allow the union to invoke arbitration simultaneous with filing a grievance with the potential for a large back pay award, assign it to an arbitrator and schedule the hearing for a date after the final grievance step decision is made. That could easily save the agency six months of back pay that would accrue if the parties waited until the grievance process had concluded before taking even the first steps to invoke the case, assign and arbitrator and get a hearing date.
Even where a large back pay potential does not exist, early invocation should be requested whenever the union alleges a violation of statute or federal regulation. If the agency objects to allowing that for any statutory/regulatory violation, then the union should seek it for the most sensitive types of violations, e.g., violations of a civil rights law, a prohibited personnel practice, etc.
The Arbitrator Sloths– Some arbitrators take forever to issue a decision once a hearing has concluded. We have seen them sit on a case for almost two years before issuing a decision. While imposing pressure on an arbitrator is a sensitive matter, no one should shy away from demanding they meet the expectations of the parties who are paying the bill. If the parties choose members of the National Academy of Arbitrators they can file a complaint with the Academy, presumably after they get the vastly overdue award seeking to sanction the arbitrator. See Code of Professional Responsibility for Arbitrators of Labor Management Disputes (Section J). But the parties must first establish a deadline for issuance of the award before they can seek sanctions. That suggests that limiting arbitrators used to Academy members has an advantage.
However, the parties can do more on their own. Where the parties use an arbitration panel they usually protect its members from being struck from the panel absent mutual agreement. However, they could insert a clause permitting either party to strike an arbitrator from the panel if he/she fails to issue a decision within the contract deadline. Most arbitrators will not want to risk losing future business because of how they prioritized their work, vacation or TV time. Another option would be to permit one or both parties to unilaterally reassign a case from a delinquent arbitrator to one committed to issuing a timely decision. The parties would negotiate a process that would send the transcript and all exhibits to another arbitrator for a decision on the record—and then inform the first arbitrator he/she will not be paid for his/her services nor used again. Finally, the parties could negotiate the content of a Letter of Commitment that would be sent to the arbitrator at the time he/she is selected asking that he/she pledge to meet the parties’ negotiated working conditions for the arbitrator by signing the letter. While only emotionally binding, that is better that ignoring the issuing of arbitrator delay.
The Fee Splitting Formula– Law requires that contracts permit unit employees to file discrimination, adverse action or ULP claims under the contract or with the EEOC, MSPB or FLRA, respectively. Presumably, Congress concluded that those statutory rights were so important that employees should never lose the right to file a claim with a federal agency and have it processed at no cost to the employee. While we agree with that perspective, it means that if the employee uses the grievance procedure, the union typically will have to pay one-half the costs of getting a final decision on the claim simply because it will come from an arbitrator rather than ALJ or Presidential appointee. That does not feel right to us. Fortunately, we have some good company. The American Arbitration Association procedures require employers to pay virtually all of the cost of arbitrating grievances over statutory rights.
To make certain all persons with employment claims arising from employer-promulgated plans are able to access the arbitration forum, the AAA’s current policy is that the employer will pay all administrative filing fees above $150 (a typical court filing fee) and all compensation for the neutral. The AAA’s policy contains two narrow exceptions to balance the protections: if a case is determined by the arbitrator to have been filed frivolously or if a case is filed with intent to harass. See the American Arbitration Association rules.
AAA adopted this policy because the Supreme Court has found that the cost of arbitration can be a violation of an employee’s Constitutional due process rights when a statutory violation has been alleged. Federal sector unions should pursue clauses that require the agency to pay all or the bulk of the arbitration costs whenever the grievance contains a claim that could have gone to EEOC, MSPB, or FLRA. Agencies likely will object, but unions could not only point out the costs of the employee choosing the statutory process, but also sweeten the offer by agreeing that management pays only where the union agrees not to bifurcate a dispute, e.g., by sending the discrimination aspect of a promotion grievance to EEOC and the contract violation claims to an arbitrator. Another reason for such a clause is that it removes the potential for the union and employee it is representing from having conflicting interests, namely, the union refuses to spend the money to arbitrate a case the employee believes is a valid one.
The Settlement Incentive– Get most arbitrators off the record and they will admit that they have decided how to rule in a case by the end of the hearing. Transcripts and post-hearing briefs only fill in details for them and the written award is a billable necessity. (Do you ever wonder why the arbitrators write pages reporting on what each party argued in the case when the parties know what they argued, the transcript recorded the arguments and the post-hearing briefs enshrined their arguments? We do given how long it takes some to issue their awards.) In any event, if arbitrators do know how they will decide the case, then why not incentivize them to use that to drive a settlement. For example, if an arbitrator knows at the end of the hearing or even the day after one that she is going to reduce a ten day suspension to five days, why not encourage her to talk off the record with the two representatives, explain what she is “most likely” to decide and encourage them to settle at that point or a variation of it? We will assume that some arbitrators will not do that because it denies them the chance to charge the parties for extra study and writing days. Consequently, why not include contract language that gives them an extra day of compensation or even a bit more if they make the call and it produces a settlement before briefs are filed? If nothing else, the grievant gets an earlier answer to his/her complaint, the settlement is not subject to FLRA exceptions, and the settlement can be sealed as well as denied precedential status if the parties agree?