CHAPTER 9

Impasse, Strikes, and
Dispute Resolution

Chapter Overview

The primary goal of the bargaining process described in the previous chapter is for labor and management negotiators to reach an agreement on the terms and conditions of employment, usually in the form of a written contract. Sometimes, however, negotiations are unsuccessful and impasses are reached. This chapter outlines what happens when impasses occur, and the alternative methods for their resolution.

The chapter first discusses the difference between interest disputes and rights disputes, focusing on interest disputes (rights disputes are discussed in chapter 10). This is followed by a thorough investigation of strikes and lockouts including the types of strikes and their legality. U.S. strike activity in the early 21st century is at an all-time low. Why? Reasons for this phenomenon are presented so that students may draw their own conclusions.

When a strike does occur, are the rules fair? Strike replacements, either permanent or temporary, have been allowed since the Mackay doctrine in 1938 and continue to be a huge point of controversy. This chapter addresses this controversy, including the fact that most other industrialized countries do not allow strike replacements and whether allowing strike replacements provides companies with an unfair advantage.

As the debate continues regarding the legal and ethical fine points of strikes and lockouts, labor has developed other economic weapons to apply pressure on an employer including boycotts, work slowdowns, and corporate campaigns. Each of these tactics is discussed in detail, providing examples and posing interesting legal questions.

These economic weapons can be very costly to the employer, employee, and public interest. However, there are ways to settle a bargaining impasse by using third-party dispute resolution mechanisms rather than economic weapons. The three primary mechanisms are mediation, arbitration, and fact-finding. As discussed in this chapter, each method has its advantages and disadvantages.


Learning Objectives

By the end of the chapter, students should be able to:

1. Explore options for resolving bargaining disputes and impasses.

2. Understand different types of strikes and lockouts, their roles in labor relations, and their legal restrictions in the private and public sectors.

3. Discuss the controversies surrounding the use of strike replacements.

4. Identify other types of pressure tactics beyond strikes and lockouts and why they are being used more frequently than in the past.

5. Compare the major third party dispute resolution mechanisms (mediation, arbitration, and fact-finding) and their strengths and weaknesses.


Lecture Outline

  1. Introduction
  2. Bargaining disputes or impasses and methods for their resolution are central topics in labor relations for several reasons.
  3. The possibility of an impasse greatly influences bargaining outcomes.
  4. Major strikes can have devastating consequences for workers, employers, and the public.
  5. Some dispute resolution methods can be used before an impasse is reached and others are designed to prevent an impasse from occurring.
  6. The method used to resolve bargaining disputes is a defining feature of different labor relations systems or laws.
  7. There are two broad categories of disputes in labor relations:
  8. Interest disputes, pertaining to conflicts of interest.
  9. Rights disputes, which are disagreements over whether someone’s rights have been violated.
  10. Strikes and Lockouts
  11. A strike occurs when employees refuse to work until an employer changes its position on one or more issues.
  12. A lockout is an employer-initiated work stoppage.
  13. There are several different types of strikes:
  14. Unfair labor practice strike to protest an employer’s unfair labor practice.
  15. Economic strike to protest current wages, benefits, and work rules (mandatory bargaining items)
  16. Sympathy strike to support other workers who are on strike.
  17. Recognition strike to pressure an employer to recognize and bargain with a union
  18. Wildcat strikes over grievances while a contract is still in effect
  19. Noneconomic strike over permissive bargaining items
  20. Not all strikes are legal in all situations.
  21. A key aspect of a strike is the picket line.
  22. All types of strikes have greater restrictions when conducted by government employees compared to private sector employees.
  23. Strikes by federal government employees are illegal
  24. Economic strikes by nonessential workers in some states are legal; but in most states all types of strikes are illegal
  25. The Railway Labor Act was passed to protect public interest against private sector strikes.
  26. U.S. strike activity in the early 21st century is at an all-time low.
  27. Strike Replacements
  28. Court rulings, especially the Mackay doctrine, outline U.S. policy on strike replacements.
  29. It is now well-accepted legal doctrine that employers cannot use permanent replacements during an unfair labor practice strike.
  30. Employers can use temporary replacements during lockouts.
  31. Banning the use of strike replacements is one of the labor movement’s top legislative priorities.
  32. Business argues that the current system is balanced and that banning permanent strike replacements would favor unions.
  33. Other Pressure Tactics
  34. Other labor pressure tactics include:
  35. Boycotts.

a.  Campaign to encourage a company’s customers to stop doing business with it.

  1. Work slowdowns.

a.  Pressuring employers by imposing costs through lowered productivity.

  1. Corporate campaigns.

a.  Unions creating negative publicity that causes outsiders to pressure or withdraw support for the targeted company.

  1. Third-Party Dispute Resolution
  2. Third-party dispute resolution mechanisms use a neutral third-party to settle bargaining impasses with the goal of avoiding costly strikes.
  3. The three primary third-party dispute resolution mechanisms are:
  4. Mediation.
  5. Arbitration.
  6. Fact-finding.

  1. Mediation
  2. Mediation is a dispute resolution process in which a neutral third-party helps negotiators avoid or resolve an impasse by reaching an agreement.
  3. The use of mediation does not need to wait until an impasse occurs.
  4. A wide range of tactics can be used by mediators to help solve a bargaining impasse.
  5. Interest Arbitration
  6. Arbitration resolves disputes by the issuing of a settlement by a neutral third party arbitrator(s) that is binding on the employer, union, and employees.
  7. Interest arbitration imposes a settlement on the parties to the dispute.
  8. The two primary forms of interest arbitration are:
  9. Conventional arbitration where the arbitrator is not constrained in deciding the settlement terms.
  10. Final offer arbitration where the arbitrator must choose between the union’s final offer and the employer’s final offer, including two variations:

a.  Total package final offer arbitration.

b.  Issue-by-issue final offer arbitration.

  1. Interest arbitration is voluntary in the private sector and often mandatory in the public sector.
  2. Most interest arbitration occurs in the public sector.
  3. Fact-finding
  4. Fact-finding is a third-party dispute resolution method in which a neutral third party investigates a bargaining impasse and issues nonbinding recommendations for a settlement.
  5. Fact-finding reports may resolve bargaining disputes in at least three ways:
  6. Help negotiators re-evaluate their positions and find an acceptable compromise settlement by establishing a set of unbiased settlement terms.
  7. Provide an opportunity for negotiators to save face by making concessions under the guise of following a report rather than appearing weak.
  8. By making the report public, subjecting parties to social pressure.
  9. Emergency strike procedures in both the Railway Labor Act and the NLRA are essentially fact-finding procedures.
  10. Fact-finding does not guarantee a resolution and does little to help the negotiating process in order to facilitate productive bargaining and a settlement.

  1. What’s Best?
  2. No method is best along all dimensions. Each of the alternatives involves trade-offs.
  3. Strikes and lockouts can be particularly costly to employers, employees, and the public.
  4. If the primary goal of a third-party dispute resolution system is putting pressure on negotiators to settle and guaranteeing a settlement, then arbitration is best.
  5. If the goal of a third-party dispute resolution system is assisting negotiators in resolving their own disputes then mediation is best.
  6. As the labor relations environment changes, the search for the “best” dispute resolution procedure continues.


Lecture Tips

This chapter is straightforward to teach. It usually does not take an entire week which provides an opportunity for finishing up chapter 8 (bargaining) if that’s running over and/or getting a head start on chapter 10 (contract clauses and grievances) and/or providing class time for in-class bargaining for the Zinnia bargaining simulation.

It is essential that students understand the difference between interest disputes (chapter 9) and rights disputes (chapter 10). The most visible and costly interest dispute is a strike and discussing various forms of strikes and their legality is a significant goal of the first part of the lecture. I use the drastic decline in U.S. strike activity to motivate a discussion of why strikes occur (in short, for many reasons, not all of which are totally understood) which segues into a discussion of strike replacements. I try to convey the legal facts about strike replacements as well as the intense controversies that have mushroomed in the last two decades or so. The many perspectives on strike replacements also provide fertile territory for ethical debates.

The labor law discussion case (Box 9.7) can be used to discuss the power of the strike replacement threat, and can break up the lecture by providing a vehicle for class discussion. The decline of U.S. strike activity and the fear of being replaced leads into a discussion of alternative pressure tactics—boycotts, work slowdowns, and corporate campaigns.

Changing gears, the costs of economic weapons and the illegal nature of many public sector strikes raise the question of alternatives to economic weapons—third-party dispute resolution methods. I cover the three primary third-party dispute resolution methods (mediation, arbitration, and fact-finding), including the standard concerns of the chilling effect and the narcotic effect. It’s useful to mention both private and public sector usages of all three methods because there are important contrasts (especially in terms of compulsory versus voluntary use of these methods) as well as hybrid procedures.


Active Learning Ideas

  1. Have students prepare answers and discuss the labor law discussion case in Box 9.7.
  2. Have students form small groups and answer the questions in Box 9.8: Ethics in Action: Strike Replacements, or Scabs? Discuss the outcomes in class.
  3. Have students form small groups and answer the questions in Box 9.16: HR Strategy: Strike Contingency Plans. Discuss the outcomes in class.


Key Terms

Students will be introduced to the following key terms:

Interest dispute / Disputes that pertain to conflicts of interest such as higher wages versus lower labor costs, seniority-based layoffs versus merit-based layoffs, or broad union input into managerial issues versus strict management rights to conduct business without interference.
Unfair labor practice strike / A strike to protest an employer’s unfair labor practice.
Economic strike / Employees striking to win better wages, benefits, and work rules. In other words, a strike over mandatory bargaining issues.
Lockout / An employer-initiated rather than worker-initiated work stoppage during a bargaining impasse.
Permanent strike replacement / Replacement workers that continue in their positions after the strike ends.
NLRB v. Mackay Radio and Telegraph Co. / A key 1938 Supreme Court decision which allows the use of temporary and permanent strike replacements during economic strikes. Overturning the Mackay doctrine is one of the labor movement’s highest priorities.
Secondary boycott / Boycotts that target secondary rather than primary employers, i.e., an organization that does not directly employ the workers who are involved in the dispute. Secondary boycotts are generally illegal in the United States.
Work-to-rule campaign / Slowdown in which employees do all of their work by exactly following all of the employer’s rules, even if they are overkill for a particular situation.
Corporate campaign / A union pressure tactic that seeks to increase labor’s power against a company by generating negative publicity that causes outsiders such as other members of the business and financial community to pressure or withdraw support for the targeted company.
Mediation / Dispute resolution process in which a neutral third party – the mediator – helps negotiators avoid or resolve an impasse by reaching an agreement.
Interest arbitration / Dispute resolution process in which a neutral third party – the arbitrator –resolves interest disputes by issuing binding rulings specifying new contractual terms governing wages and terms and conditions of employment.
Chilling effect / A possible side effect of arbitration in which the presence of arbitration makes negotiated agreements less likely. Arbitrators may split-the-difference between the final offers of each side. Each side might then not be willing to compromise during negotiations because if they don’t reach an agreement and the arbitrator splits the difference, then they come out further behind if they make earlier compromises. This disincentive to make concessions during negotiations is viewed as chilling the bargaining process.
Narcotic effect / A possible side effect of arbitration that occurs when negotiators develop a dependence on third party dispute resolution methods because of the ease of passing the buck to the arbitrator.
Fact-finding / Third party dispute resolution method in which a neutral third party – the fact-finder – investigates a bargaining impasse and issues nonbinding recommendations for a settlement.


Reflection Questions

1. Not all forms of strikes are protected by the NLRA. What types are protected? Unprotected? Does this make sense, or should all types of strikes be treated equally?

Protected strikes: Economic, Unfair labor practice, Recognition. Sympathy strikes may be protected. Wildcat strikes are occasionally protected. Jurisdiction strikes and noneconomic strikes are not protected. It makes sense because the NLRA seeks to promote labor peace while balancing property rights with labor rights. Thus, some strikes are viewed as acceptable for the promotion of labor rights (e.g., economic strikes) whereas other are viewed as not (e.g., jurisdiction strikes or wildcat strikes when unions have agreed to more peaceful dispute resolution methods).

2. Should permanent strike replacements be prohibited? How about temporary replacements? The public debates typically have an all-or-nothing flavor: organized labor argues for a total ban on permanent replacements and business defends the status quo of allowing them in all economic strikes. How can these extreme positions be modified to find a suitable compromise? Also, does the doctrine on decertification elections and strike replacements need reforming? If so, how?

Student answers will vary. Opponents of proposals to ban permanent strike replacements argue that such a ban would raise labor costs and harm international competitiveness. Labor supporters who want to ban permanent strike replacements argue that the United States is already unique among industrialized, democratic countries in allowing permanent strike replacements. One possible compromise position is only allowing permanent strike replacements after a certain amount of time, for example, six months. This would give the union a chance to settle without the threat of being replaced until some later date. Percentage-wise, not many decertification elections take place. However, preventing decertification elections during strikes or not allowing replacement workers to vote might remove the most destructive temptation of using strike replacements—to completely bust a union.