Misc. Articles

Binding Arbitration – The New And Improved Model
By: Dieter C. Dammeier
LACKIE & DAMMEIER LLP

At PORAC’s urging, one of Gray Davis’ final pieces of legislation signed before leaving office was SB 440. It’s predecessor, SB 402 was held unconstitutional by the California Supreme Court. SB 440 is a “new and improved” version designed to withstand some of the constitutional challenges SB 402 faced. While SB 440 will still face serious constitutional challenges by cities and counties, until those challenges are made and ruled upon, binding interest arbitration is back and in full force. As you recall, while SB 402 was in its infancy, there were numerous contracts negotiated just under the threat of going to binding arbitration. Regardless of the ultimate fate of SB 440, it will likely have the same initial effect of getting people at the bargaining table to think more reasonably.

Below is a step-by-step guide to take an association through binding interest arbitration

Scope of Arbitration:

Matters which are subject to arbitration under SB 440 include salaries, wages and overtime pay, health and pension benefits, vacation and other leave, reimbursements, incentives, differentials, and all other forms of remuneration. (CCP §1299.3(g))

Going From Negotiations to Binding Arbitration:

Prior to going to binding arbitration, the arsenal of tools currently available to an association may still be utilized. These tools include using political pressure by various means and tactics to convince the employer to do the right thing. For larger and more politically active associations, the political route may still be the best arena for obtaining an association’s desired results. For smaller or less politically involved associations, other activities may be utilized, such as slow downs, speed-ups, and the like. If none of these actions are successful, binding interest arbitration may be an association’s only remaining course of action.

Step One –Declare Impasse:

Either party must declare an impasse. Impasse may only be declared after exhausting all mutual efforts to reach an agreement. (CCP § 1299.4(a))

Step Two – Decide on Mediation:

Decide if mediation would be helpful. If the parties are unable to agree to the appointment of mediator, mediation is not required. (CCP § 1299.4(a)) There may be other local impasse rules which may be followed prior to submitting the issue to arbitration. For example, either local rules or the MOU may call for an impasse procedure to include mediation and/or advisory arbitration. Submitting to such procedures could considerably prolong matters. No doubt, one area that will be litigated by the courts will be to interpret whether SB 440 may be implemented without going through impasse procedures. Until then, it is suggested that if the impasse procedures are not significant, the association should submit to them to avoid a losing employer challenging the arbitration award by claiming impasse procedures were not followed.

Step Three – Request Arbitration:

Only the association may request binding arbitration. To do so, the association must make this request in writing to the employer. (CCP §1299.4(a))

Step Four – Arbitration Panel Selection:

Within three days after receipt of written notification to the employer, each party shall designate a person to serve as its members of an arbitration panel. The two selected members shall then, within five days, designate an impartial person with experience in labor and management dispute resolution to act as chairperson of the arbitration panel. (CCP §1299.4(b)) If the two members are unable to mutually select a chairperson, a joint request shall be made of the American Arbitration Association or California State Mediation and Conciliation Service for a list of seven impartial experienced persons who are familiar with matters of employer-employee relations. (CCP § 1299.4(c)) After receipt of the list of arbitrators, and within five days, if the members are unable to agree on any arbitrator on the list they must alternately strike names form the list, with the last name remaining being the chairperson. Determining who strikes first shall be determined by lot. (CCP § 1299.4(c)) The above time limits may be extended by mutual agreement. Additionally, the parties may agree to simply use one arbitrator in lieu of a panel of three. Depending on the association’s resources, this may be more feasible.

Step Five – Submit Last, Best and Final Offer:

Five days prior to the commencement of arbitration hearings, each of the parties shall submit to the arbitration panel a last, best offer of settlement as to each of the issues within the scope of arbitration. (CCP § 1299.6(a)) It is important to note that any issue included in the last, best offer must have been made in the bargaining process prior to the arbitration request. (CCP §1299.6(a)) The parties may by mutual agreement elect to submit as a package (all issues) the last, best offer of settlement made in bargaining (excluding issues outside the scope of arbitration, i.e. non-economic matters). (CCP§1299.6(b))

Step Six – Duties of Arbitration Panel:

Within ten days of being established, the arbitration panel shall meet with the parties or their representatives, either jointly or separately, make inquires and investigations, hold hearings, and take any other action, including further mediation, that the arbitration panel deems appropriate. (CCP §1299.5(a)) To complete these duties, the arbitration panel is authorized to issue subpoenas for witnesses or documents, conduct investigations, administer oaths, and inspect employer and/or employee organization records. (CCP 1299.5(b))

The arbitration panel, within thirty days after the conclusion of the hearing, shall separately decide on each of the disputed issues submitted by selecting, without modification, the last, best offer that most nearly complies with the applicable factors described below. If the parties had decided on a last best offer package proposal, the panel shall decide which package, without modification, most nearly complies with the follow up factors. (CCP §1299.6(b))

Factors Utilized by Arbitration Panel:

· Stipulations of the parties.

· Interest and welfare of the public.

· The financial condition of the employer and its ability to meet the costs of the award.

· The availability and sources of funds to defray the cost of any changes in matters within the scope of arbitration.

· Comparison of matters within the scope of arbitration of other employees performing similar services in corresponding fire and law enforcement employment.

· The average consumer prices for goods and services, commonly known as the Consumer Price Index.

· The peculiarity of requirements of employment, including, but not limited to, mental, physical, and educational qualifications; job training and skills; hazards of employment.

· Change in any of the foregoing that are traditionally taken into consideration in the determination of matters within the scope of arbitration.

Step Seven – Arbitration Panel’s Decision:

After receipt of the arbitration panel’s decision, the parties are not allowed to publicly disclose the decision for a period of five days. During that five-day period, the parties may meet privately, attempt to resolve their differences and, by mutual agreement, amend or modify the decision of the arbitration panel. (CCP 1299.7(a)) After the five-day period, the arbitration panel’s decision, as may be amended or modified by the parties, shall be publicly disclosed and shall be binding on all parties, unless there is an unanimous vote of the governing body to reject the decision. If specified by the arbitration panel (so make sure to ask), the decision shall be incorporated into and made a part of any existing Memorandum of Understanding between the parties. (CCP § 1299.7(b))

About the Author: Dieter C. Dammeier is a LDF panel attorney with LACKIE & DAMMEIER LLP, representing police unions in negotiations and disciplinary matters.