This article originally appeared in HR News Magazine, November 2020 Edition.

Most collectively bargained contracts define procedures for resolving disputes between an employee represented by the union and the employer. Such grievance procedures generally consist of two to four steps, with the final step being an arbitration hearing before a neutral arbitrator. The arbitrator is a third party who is mutually selected and paid by the parties to settle the dispute.

Regardless of specific details, the grievance procedure provides a mechanism for unions, the employees they represent and, occasionally, employers to engage in an orderly process to enforce the terms of their contract after an alleged violation occurs. The grievance procedure is a substitute for formal litigation in a court of law, as well as for disruptive actions such informal work stop­pages that are commonly described as a “blackboard flu” or “blue flu”. Unlike their private sector counterparts, many public sector employees do not have the right to strike.

Every employer and union should ask whether a grievance procedure is effective in achieving the goal of settling disputes quickly and efficiently at a reasonable cost and without ruining the relationship between the parties. An indicator that the grievance procedure is not meeting these benchmarks is that a large number of grievances go to arbitration.

Arbitration is adversarial. Regularly relying on an arbitrator to decide contentious issues can be distracting and expensive. It can also lower morale and create hard feelings.

What can be done to make a grievance procedure more effective? My recommendation, based on 42 years of representing all types of employers in every imaginable dispute over disciplinary actions and contract interpretations, is to include a mediation step in a contracted grievance procedure. Mediation works best when it is the step immediately before arbitration.

I recommend requiring mediation for

  1. Reaching speedier resolutions,
  2. Lowering costs, and
  3. Involving a neutral party in guiding disputing parties in working collaboratively to reach a mutually agreeable resolution.

Speedier Resolutions

The 2020 Annual Report of the American Arbitration Association (AAA) shows that there were 5,738 arbitration case filings with the association in 2019. The average time from when a case was filed until a decision was issued by an arbitrator was 252 days, or more than eight months. In states with large numbers of filings, the average time from a filing to decision was even longer, as shown in Table 1.

Table 1. Arbitration Cases and Time From Filing to Decision for States With the Most 2019 Cases

State Total Cases Decision Issued In…
Pennsylvania 863 256 days
Massachusetts 632 296 days
New Jersey 360 338 days

Source: American Arbitration Association 2020 Annual Report.

Waiting for most of or more than a year to receive a decision regarding a contract violation or interpretation may lead to chaos in the workplace when the issue being disputed recurs repeatedly. Additionally, cases that take long times to reach resolutions harm employers and employees.

The employer potentially incurs high costs for back pay and lost benefits. Employees may have difficulty making ends meet during the period they are suspended, separated or simply denied earned pay and benefits. Mediating a dispute after two or three steps of the grievance procedure fail to produce a resolution generally ends the case within 30 to 60 days of when the case is first filed.

Lower Costs

AAA’s 2020 Annual Report also shows that arbitrators charge an average of $1,600 per day. The actual charge ranges widely, however, with more-popular and -experienced arbitrators charging significantly more than the national average. This is particularly true in states that have more arbitrations.

Table 2. Maximum and Average Charges by Arbitrators in Selected States

State Max. Daily Charge Avg. Daily Charge
New York $3,600 $1,800
Maryland $3,000 $1,800
New Jersey $2,900 $1,900

Source: American Arbitration Association 2020 Annual Report.

The per-day charges can add up quickly. Most arbitrators charge for at least three days of work-one for the hearing and two to review testimony, study exhibits, review briefs and write their decision. When, as is often true, briefs are filed after the hearing, the arbitrator may charge for an additional day or days. Note, too, that the time witnesses lose from performing their usual duties constitutes a hidden cost for a dispute that goes to arbitration.

Paying the arbitrator is only one high-visibility expense. For example, legal fees for outside counsel can be significant. I am not, by the way, suggesting that parties to arbitration cases should avoid engaging outside counsel. If a grievance is important enough to arbitrate, experienced counsel should be involved so evidence and arguments can be presented most effectively.

Legal work includes interviewing witnesses and organizing testimony, as well as preparing witnesses for direct examination, cross-examination and questions from the arbitrator during the hearing.

Most state employment agencies employ mediators to help parties negotiate contracts and resolve disputes. In Michigan, where I live and practice, there is no charge for a state mediator.

A mediation does not require extensive hearing preparation because it is not adversarial. An investigation must still be done to ascertain facts and locate documents, including the full text of relevant contract provisions. A review of applicable employment law may also help both parties, but findings can be informally summarized in brief position statements that do not need to be written out.

Since the mediator is an outside third party, a mediation generally begins with each party simply informing the mediator of the nature of the dispute and outlining their opposing positions. This is generally done in a joint session with both parties present.

Presenting, examining and cross-examining witnesses is not necessary during a mediation. Once the mediator understands the dispute, they usually conduct private caucuses with each party to probe settlement possibilities. The caucuses often yield a resolution in less than half a day.

Involving a Neutral Party to Guide Collaboration

An experienced, neutral mediator can assist the disputing parties in removing impediments to achieving a resolution without damaging their relationship. The mediators in Michigan and most other jurisdictions are labor relations professionals with backgrounds in labor organizations or management. Some have worked for both unions and employers. They also have experience mediating all kinds of disputes over disciplinary actions and contract interpretations.

Mediators get involved with the goal of helping the disputing parties reach an agreement that resolves the issue. Their job is not to decide which party may be right or wrong. Because they are neutral outsiders who hold no stake in the outcome, mediators can often say things to one party that would be contested if it came from the other party.

Mediation is also confidential and nonadversarial, which allows parties to consider all types of solutions in private. This fosters collaboration rather than contention.

For example, picture a case over whether a promotion was given to the proper applicant under a contract clause requiring promotions to be awarded to the “senior qualified applicant.” At arbitration, the parties would almost certain argue vigorously over the meanings of each word and the actions that were taken. An arbitrator’s ruling that the junior employee was qualified and the senior employee was not could lower the morale of the senior grievant and all other senior employees.

As a result of mediating this same dispute, however, the employer and union could agree to a resolution that serves everyone’s interests. The decision to promote the junior employee might stand because the person is clearly qualified, and the senior grievant might receive training over the course of the following year to become qualified for a future opening. Reaching such a sensible, win-win mediated resolution that preserves morale would not be possible if the dispute went before an arbitrator who merely decided whether the collectively bargained contract had been violated.

Calling in a mediator can also reduce the danger to an organization that results from one party to a dispute becoming so convinced of the rightness of their position that they undervalue the potential for the other side prevailing and the risks that could follow from such an outcome. A mediator can discuss a range of outcomes while educating each party about the weaknesses of their own position and the strength of the opposing side’s position.

These reality checks can be much more persuasive when a neutral third party issues them. The same information from the opposing party will be viewed skeptically.

Likewise, a mediator who has no stake in the outcome can often reach a grievant who is pressing their claim out of emotion. An experienced mediator brings much more credibility when explaining to an intransigent party that they will likely lose at arbitration. Holding that particular discussions during a private caucus and out of earshot of the other party should make the truth easier to accept.

Finally, a mediator can present proposals – or even supposals – that they identify as their own ideas. If the same suggestions were to come from the opposing party, the grievant or employer would probably reject them. Having the mediator float ideas confidentially makes it possible for a party to back off from an unreasonable position and to be flexible in accepting positions they would prefer not to take publicly. This encourages the trading of good-faith counterproposals between the parties.

Adding a mediation step to the grievance procedure spelled out in a collectively bargained contract benefits employees and employers by promising speedier resolutions, delivering lower costs and adding value by involving a neutral facilitator. When such a provision is not written into a contract, mediation can still be used when disputing parties mutually agree to do so. The time limit for starting arbitration proceedings can be suspended while the parties try mediation – which in my experience, is well worth the effort.

About the Author:

James B. Perry is a member in the Detroit office of Dickinson Wright PLLC. He represents a wide variety of public and private employers in collective bargaining, and he handles all types of employment and labor law issues. Perry can be reached at (313) 223-3096 or jperry@dickinsonwright.com.