As state and local governments in the United States have been stretched to the breaking point, conflicts between public-sector employers and employees have become increasingly acrimonious, often resulting in stalemates.
When governments and employee unions reach impasse, they often turn to alternative dispute-resolution practices such as mediation and arbitration. Though these practices can be successful, the nonbinding nature of mediation and some forms of arbitration sometimes leaves disputants back at square one. Meanwhile, binding arbitration—in which the arbitrator is empowered to impose a decision—sometimes leads disputants to stake out extreme positions rather than attempting to meet in the middle.
Some states are seeking to avoid these pitfalls by applying another type of arbitration to public-sector disputes, write professors Michael Carrell and Richard Bales in a new article. Final-offer arbitration—also known as “baseball arbitration” because Major League Baseball uses it to resolve labor disputes—requires an arbitrator to choose between each party’s last, best offer rather than fashioning a resolution herself. Given that the arbitrator is likely to choose the more reasonable package, final-offer arbitration gives parties an incentive to craft deals that meet both sides’ interests with an eye toward pleasing the arbitrator. As a result, parties often settle their disputes even before a final-offer arbitration process begins.
In Indiana, a new statute requires teachers’ unions and school districts to engage in final-offer arbitration if they cannot reach agreement in mediation. In 2011, the first year the law was in place, all such disputes were resolved in mediation; none required arbitration. Carrell and Bales’s article offers more details for governments and unions that might be considering the benefits of using final-offer arbitration as a means of reducing impasse, strikes, and lockouts.
Resource: “Considering Final Offer Arbitration to Resolve Public Sector Impasses in Times of Concession Bargaining,” by Michael Carrell and Richard Bales. Ohio State Journal on Dispute Resolution, 2013.
