Impasse Procedures
Professor Bruce Fortado
University of North Florida
MAN 4401/6411 Labor Relations
When contract negotiations do not result in a settlement by the contract expiration date or strike deadline, an impasse is said to exist. One might call a strike the ultimate impasse procedure. However, “impasse procedure” refers to methods such as mediation, fact-finding, interest arbitration, and mediation-arbitration.
Mediation The most widely used third-party impasse procedure is mediation. Most mediators work for the Federal Mediation and Conciliation Service (FMCS), which is an independent agency that was set up by the Labor Management Relations Act (LMRA). There are also mediators that work in the public sector. The parties also could bring in their own mediator, if they are able to agree on a person and reach a payment arrangement. If one uses the FMCS, the service is free and voluntary.
The original mission of the FMCS remains the same: namely, to prevent or minimize strikes that disrupt interstate commerce or national defense. Mediators are equally drawn from labor and management backgrounds, and must be neutral in their activities. They have no formal power to order or compel the parties to do anything. Instead, they must use their skills at listening, exploring, reasoning, and suggesting possible solutions. The FMCS gets 30 days notice before contract expiration in the private sector, and 60 days notice in health care. A mediator is then assigned.
Initially, a mediator will check with the parties to see how things stand and if they anticipate needing assistance. When they enter a situation, they will meet first with one side and then with the other to get their versions. Each side will be asked to prioritize their issues. The simplest issues will be dealt with first. The mediator will put forth an effort starting at the initial stages and continuing through the process to build a rapport with the parties. They will try to identify who is influential on each team and where obstacles exist. A joint conference may then be called. The parties will then caucus and discuss the situation. They normally subsequently reconvene to see if they can make progress. This process may be repeated again and again. The mediator may choose to lighten the process with jokes and breaks, or intensify the process by keeping it going relentlessly. When the parties make progress, the mediator will praise them. When they are not making progress, he may chide them.
A mediator can be very useful in restarting stalled negotiations. Parties who stated this was their final offer, when they actually had more room before their resistance point can now make a move and save face. They can say the mediator has urged them to reconsider or the mediator can put forward the proposal. The mediator will urge the parties to be flexible, and will try to identify where they have an ability to move and where they do not. The mediator may be able to help with his knowledge of how other settlements have been reached and what common practices are. A mediator can help to keep the discussions on track and reduce personalized attacks. The parties are encouraged to blow off steam in private meetings with the mediator. When the parties are together, he will try to control their expressions of hostility. One of the key things mediators do is keep communication channels open, even when things are not going well.
There are two basic mediation styles. In the private sector, where the union can strike, the mediator may largely be an “orchestrator” who sets up the meetings and keeps the parties working on the problem in an orderly fashion until they settle. This style uses the threat or reality of a strike as the moving force. If a mediator in this style puts forward a proposal, it probably is a proposal from one of the sides, and the mediator is helping the process along by saying it was his idea.
In the public sector, where strikes are normally not allowed, the mediator may act more aggressively as a “dealmaker.” Here, the mediator will actively put forward his own proposals and push for a settlement. The mediator can tell the parties in private caucuses when they are out of line. The mediator may schedule frequent meetings and keep the meetings going late into the night, if not all night, near the contract expiration deadline. The parties may concede more when they get tired. The mediator may describe the worst case scenario if a settlement is not reached in some detail. Reasons and explanations for a possible settlement may be put forward to help the parties find ways to sell a settlement to their constituents. In some instances, the need to compromise may be explained to a stubborn party as being necessary based on the mediator’s insistence (i.e. blame the mediator who said this was unrealistic). Late in the evening, one mediator told me he would light very bad cigars and try to smoke the parties out. This he felt would lead them to compromise to get out of the room. The mediator may use less heavy-handed tactics such as meeting with the parties alone or even whispering in their ears over and over “Can you give me a little more?” and “Is there anything more you can do?”
One danger in the process is the mediator may push very hard on the more flexible and/or weaker side. An agreement might be reached, but it may not be the best agreement for the parties to then live under for the term of the contract. If the mediator gets too forceful or acts in an otherwise objectionable fashion, one or both of the parties may eject him. Another mediator may or may not come in and take things from there.
During the time your professor was in graduate school, a mediator came to speak in a class as a guest. I asked if mediators ever lied to the parties. The mediator gave the following response. You are coming down a forest trail. There are two types of Indians in the forest. There are the “Whitefeet” who always tell the truth, and the “Blackfeet” who always lie. You encounter an Indian coming toward you on the forest trail. You ask the Indian what tribe he belongs to. He tells you he is a Whitefoot. This was the end of the mediator’s reply. I was left to interpret the story. Was he telling me that there were both types of mediators in the forest? Was he telling me this was a dumb question, because if he was a Blackfoot liar he would never admit it? Was he telling me mediators are adept at avoiding being pinned down, and tell mysterious stories that the person asking the question can interpret as he will, and the mediator could of course deny?
The FMCS notes settlements are reached in 95% of the cases without a strike. Evaluating mediation is no easy task. If the parties have overlapping resistance points, we know settlements are possible. There is no way to know, though, if the parties would have settled if there was no mediation. If there is no overlap in resistance points, it is possible there will be a strike no matter what the mediator does. In some instances, a strike may be necessary to get the parties to abandon outmoded views or vent their frustrations. Mediation helps more where there are inexperienced negotiators.
Fact-Finding The Railway Labor Act and the national emergency procedures of the LMRA include fact-finding procedures. These processes have not always produced substantial results. Some states where strikes are prohibited in the public sector have established a fact-finding procedure. If one side is assigned blame by a neutral, a solution may follow even though the fact-finder holds no formal power. This is a semi-judicial process. A hearing is held when an impasse is reached in contract negotiation to determine where the parties differ. The parties must organize their points. The hearing will clarify positions and the gaps that exist. The fact finder encourages the parties to present their justifications and records them. Some fact finders are empowered to recommend a “fair” settlement. The fact finder normally writes a report. This report will be released to the press. This should educate the public. If added costs are involved, the education process is a very important one for the taxpayers involved. The publicized report may also create pressure on one or both of the parties, especially if they are being extreme or otherwise unreasonable. The report may also be passed on to either an arbitrator (see interest arbitration below) or a governing body like the state legislature.
A number of reservations have been expressed about fact-finding. There is no finality in the process itself. The final report is a recommendation and nothing more. Will the arbitrator or the Legislature pay attention to the fact finder’s report, or will it merely delay the process and ultimately be ignored? Could the process be accelerated and resources saved by going immediately to a binding decision-making process like interest arbitration? Further, if a fact finder issues a recommendation that is very unfavorable to the administrative powers that be, will he be employed again in the future? If the fact finder is worried about his future employability, he may not make recommendations that are likely to offend the government bodies involved.
In Florida, we have a “special master” procedure where the recommendations are passed on to the legislature, or for university employees after the recent decentralization (2002), local governing boards. For a number of years (decades), the faculty union for the state universities was wary of undertaking this impasse process. More recently, this process has been used. The special master’s recommendations have been favorable, and the legislature did not merely rubber stamp the final positions of the administrators involved. One special master in 2002 called the final offer of the state negotiator of no salary increment and one-time bonuses at an unspecified time and with unspecified criteria as like “buying a pig in a poke,” and in comparison to other states were the “bottom of the barrel.” He suggested the state authorities consider whether they could afford raises in base salaries such as had been previously negotiated. The legislature approved 2.5% across the board and the governor signed the bill. This was the last round of centralized state university negotiations. Now each university has local negotiations.
Interest Arbitration An arbitrator is a third party neutral who hears a case in a quasi-judicial format and renders a final and binding decision on the issues set before him. The most common form of arbitration deals with grievances, which is called “rights arbitration.” This process of living under a contract without strikes by utilizing grievance arbitration will be dealt with later in our course. The process of settling impasses in negotiation over the terms of the next contract with arbitration is called “interest arbitration.” This impasse procedure is most commonly used in the public sector where strikes are prohibited. However, there are examples of interest arbitration being used in the private sector. The National War Labor Board used interest arbitration during WW II.
Today, salary disputes in baseball may be resolved via arbitration.
The steel industry endured a period where there either was a strike, or the threat of a strike, each contract negotiation. Many clients would seek out secure supplies of steel from other countries. Once this business was lost, it did not return, or at least it did not fully return, once a settlement was achieved. This cost the companies’ profits and the workers’ jobs. The Experimental Negotiation Agreement (ENA) was put in place, providing for the arbitration of the remaining issues rather than resorting to a strike. This process solved the problem and stayed in place until the 1986-87 negotiations. Coordinated bargaining and the ENA were ended, and US Steel (USX) endured the longest strike in steel history. This stemmed from US Steel taking roughly 1 billion in concessions from the steelworkers and using these funds to buy oil and gas operations, rather than modernizing its steel facility and saving steel jobs as was initially promised.
Most public sector unions would vastly prefer to have interest arbitration as an option, rather than merely mediation or fact-finding. Having a neutral party come in to settle matters, rather than a political body like a legislature, seems more objective.
There are several concerns about the interest arbitration process. The “narcotic effect” refers to the parties becoming hooked on interest arbitration, never learning to settle matters by themselves. The “chilling effect” refers to the parties anticipating the arbitrator will tend to split the difference between the positions the parties put forth, so they become reluctant to move from extreme positions, thereby insuring an impasse will indeed result. If this takes place, the impasse procedure is harming rather than helping the settlement process, because settlements are being delayed and the parties are not reaching their own agreements. Settlements by the parties who must ultimately live together are judged to be superior to anything an outsider could come up with. “Final- offer arbitration” refers to the arbitrator being required to select one of positions the parties put forth, rather than splitting the difference. Since one of the positions must be selected, the parties have an incentive to put forward a more reasonable offer in hopes of it being selected. This could alleviate the “chilling effect” mentioned above. Under some laws or contracts, the arbitrator must pick one entire-package or the other. In other instances, the arbitrator can select options issue-by-issue.
Should an arbitrator consider the ability of an employer, possibly a state or local governing body, to pay, or should he only consider the party’s offers, current economic conditions and the outcome of other recent negotiations? The union wage differential in the public sector is in the 5% range, compared to 20% in the private sector. Accordingly, interest arbitration is unlikely to result in huge jumps or require increased taxes. One would think cuts are unlikely to be achieved via interest arbitration, but in the private sector one could simply pull out of the process before one sought cuts (e.g. steel).