Big Waste, Bad News

Two Arbitration Bills, Two Bad Ideas

Two bills are working their way through the House of Representatives in Lansing that would change the process of binding arbitration, which is used to resolve contract disputes between local governments and their employees. One of these bills is, at best, a complete waste of time. The other is just a lousy idea.

SB 1072 began as weak reform bill that apparently represented an attempt to speed up the process of arbitration. One of the many problems with arbitration is the tendency of arbitration to drag on well past the deadlines set in the current law, creating uncertainty for workers and the risk of back-pay awards for employers. Our research indicates that a typical arbitration panel takes 15 months to reach a decision. It is not unheard of for a panel to take over three years to make a decision — meaning that an award can expire before its terms can be put in place. While SB 1072 adds new deadlines, it does not establish any new mechanisms to keep the parties or the panel on track — what it creates is a new schedule for arbitrators to ignore.

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And as the bill worked its way through the Legislature, it picked up an anti-reform provision that may result in more workers being covered by a binding arbitration process that adds as much as 5 percent to the cost of local government. The amended bill extends arbitration to include joint regional authorities and boards that local governments establish so they can pool resources and provide fire service. It is not clear whether or not these local authorities are covered by arbitration under current law, but given how much of a strain arbitration puts on local governments, any ambiguity should be resolved in favor of taxpayers, not unions.

HB 6154 is just bad news. This bill would extend binding arbitration so that it covers guards at county and city jails. There is not even a pretense of reforming the arbitration system here; this is simply a matter of empowering unions at the expense of taxpayers by extending arbitration to a new class of workers who are clearly not covered currently.

Real reform of binding arbitration would at a minimum ensure that arbitrators consider ability to pay — currently, the financial health of the community is just one of many factors that an arbitrator may consider or ignore — and also set up some standards of proof and procedure so that a reckless arbitration award can be effectively challenged in court. Better yet would be repeal of binding arbitration as part of an overhaul of government labor law. As things stand now, taxpayers can have substantial financial burdens placed on them by an arbitrator who is not accountable to citizens. That needs to be fixed.