BINDING INTEREST ARBITRATION

BINDING INTEREST ARBITRATION: A highly controversial procedure used to delegate to a third party or parties the power to resolve an impasse in bargaining over a new or extension of an existing labor contract.

Note that this is different from "grievance arbitration" which is a common non-controversial method for resolving disputes over the application or meaning of a labor contract. A hearing is held before an arbitrator. Also used for appeals from disciplinary action against employees covered by the contract.

Binding interest arbitration is undemocratic because it takes decision making authority away from the governing body, board, city council, etc. and gives the public and its representatives little or no say in how their tax or rate dollars are spent.  Final decision making authority is placed in the hands of non-elected third party arbiters accountable to no one.  If council or board members make poor fiscal decisions, they can be voted out of office.  If a non-elected arbiter does, the public is stuck paying.

This is why binding interest arbitration has been declared unconstitutional in many jurisdictions and it is strongly opposed by associations of cities, school boards and labor negotiators. 

League of California Cities
SUMMARY OF EXISTING POLICY AND GUIDING PRINCIPLES
Labor Relations   

The League opposes any system of compulsory and binding interest arbitration, including state-mandates and the imposition of binding arbitration through the initiative process.  No arbitrator board or other private person should have any control, direct or indirect, over local budgets, revenues or appropriations. 

Maryland Association of Boards of Education   Section 2 - Binding Interest Arbitration (Amended 2003)
The intent of negotiations is to provide an incentive for mutual agreement in the areas of salary, wages, hours and other working conditions.  Policy decisions should be the responsibility of the local board of education. Binding interest arbitration by a third party could defeat the intent of negotiations and thereby erode the authority of the local board.  This Association therefore advises against binding interest arbitration agreements and opposes binding interest arbitration legislation.

TEN REASONS WHY BINDING ARBITRATION OF PUBLIC SECTOR LABOR DISPUTES IS NOT IN THE PUBLIC INTEREST    http://www.psrf.org/issues/bind.jsp

Binding arbitration discourages honest, good-faith collective bargaining -- as long as this extra step is available, a party may hold back on the compromise-making accommodations on which effective bargaining relies.  The process is unbalanced since it makes a no-risk or low-risk step available to a union -- rarely will an arbitrator award a union less than what management has already offered.

Please send comments or questions to Chugach Consumers