Minnesota Cities Magazine

Letter of the Law: Labor Arbitration 101

By Irene Kao

Arbitration. It sounds like a scary word, doesn’t it? It doesn’t have to be. Armed with some basic information about arbitration, you will find that the process is not so intimidating.

arbitrationAs a city official, you can come across arbitration in a couple of situations. First, the city and a union can’t see eye-to-eye on all of the items in a collective bargaining agreement (also called a labor agreement or union contract). Second, a union employee is pursuing a grievance against the city. In both of these situations, the city may end up finding a resolution through arbitration.

So, what is arbitration? Arbitration is a process where a neutral third party (someone who is impartial) resolves a dispute. The arbitrator hears evidence and makes decisions based on the evidence, similar to a judge in court. The difference is that in court, a judge is assigned to your case, but in arbitration, the parties involved can choose the arbitrator.

Types of arbitration
Cities most commonly deal with labor arbitration, which may be used to settle a dispute between an employer and a union. In Minnesota, public-sector labor arbitration is governed by the Minnesota Public Employment Labor Relations Act (MPELRA), found in Minnesota Statutes, chapter 179A. MPELRA provides guidelines for interest arbitrations and grievance arbitrations.

Interest arbitration arises when a city and a union are negotiating their collective bargaining agreement but are unable to agree to all of the terms of the contract. Before arbitration, the parties will have attempted to resolve their differences in mediation. If the parties are still at a stalemate, the commissioner of the Bureau of Mediation Services (BMS) will certify the issues to be addressed by an arbitrator.

Grievance arbitrations can arise in a variety of contexts. For example, in the last year, there were grievance arbitrations regarding when vacation requests could be denied for police officers; if an employee could be put on a five-day unpaid suspension for refusing a fitness-for-duty examination; if there was just cause to terminate a police officer’s employment when she failed to respond to a call because she was using Facebook; and if a public works employee who was in charge of a work crew consisting of himself and one other worker must be paid employee-in-charge supplemental pay.

Before arbitration, a grievance is typically brought by an employee and a union representative to the employee’s supervisor. Typically, the employee’s supervisor then provides a written response. If the employee is unsatisfied with the supervisor’s response, the union (on the employee’s behalf) can bring it to the next step or steps as defined by the collective bargaining agreement. If the issue is still unresolved, then it moves into arbitration.

Cities should be aware of other grievance procedures, including those under the Veterans Preference Act (Minnesota Statutes, section 197.46) and civil service systems (Minnesota Statutes, chapters 419 and 420). An employee may use only one grievance process.

For example, if a veteran grieves his or her termination through a veterans preference termination hearing, the veteran cannot also pursue the same case under the collective bargaining agreement.

Selecting an arbitrator
Whether it is an interest arbitration or a grievance arbitration, an arbitrator needs to be selected. The parties can mutually agree to an arbitrator from the BMS arbitrator roster.

Or, the more likely option, the parties can ask the BMS to send a list of arbitrators from which the parties will alternatively strike names. There is an art and strategy in striking names. Cities should do their research on the identified arbitrators, which should include reviewing their previous decisions.

The League of Minnesota Cities has a tool that can help you with your research. It is a database of arbitration award summaries that is searchable by arbitrator name, arbitration type (interest and grievance), employee group (law enforcement, public works, attorney, etc.), and date. To see over 100 recent arbitration awards, visit www.lmc.org/arbitration. The BMS also has an online library of arbitration awards at http://mn.gov/bms/arbitration_awards.html. The BMS library contains awards going back to 2006, but it is not searchable.

Last resort
What is the most important thing for cities to remember about labor arbitration? An arbitrator’s decision is final and binding. That means the city and the union must comply with whatever the arbitrator decides.

An arbitrator’s decisions may be overturned, but that happens only in the case of some very limited exceptions such as if the decision is determined to be contrary to state law or city ordinance. Therefore, a city should think strategically about whether to proceed to arbitration or settle with the union beforehand.

Irene Kao is a research attorney with the League of Minnesota Cities. Contact: lkao@lmc.org or (651) 281-1224.

Read the March-April 2014 issue of Minnesota Cities magazine

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