Reading the Tea Leaves on Labor Arbitration
What can we expect from Trump's second administration
I created this newsletter as a guide to improving your labor arbitration practice, and I promise to get back to that shortly. In generally, arbitrators don’t wade into politics too much in their professional capacity, since parties who select them may have different views or see politics as creating an appearance of bias or partiality. Still labor arbitration is a construct that developed in the legal system as a consequence of political issues and it will be subject to more changes as labor policy shifts.
I’ll be more specific: Labor arbitration is an alternative to strikes and work stoppages. Although labor arbitration was given Supreme Court approval in the Steelworker Trilogy, it is not an alternative to litigation and was not created by those decisions. Labor arbitration predates the National Labor Relations Act and flourished in a policy environment that favored collective bargaining over industrial action (strikes and work stoppages). This is why employers supported the passage of the National Labor Relations Act: it introduced economic stability and labor peace into industrial operations. Reform or repeal of the NLRA and other federal labor laws will impact labor stability in this country, and the incoming administration has proposed a number of changes that practitioners should be aware of, regardless of whether they agree with the changes or not.
Obviously, it’s too soon for the incoming president to have articulated his plans for reforming federal labor law. However, the Heritage Foundation’s Project 2025 has laid out several areas of proposed reform, and I feel confident that this is directionally where President Trump’s political appointees and legislative allies intend to go.
There are two policy areas that highlight labor law in the Project 2025. The first area is Chapter 3: Central Personnel Agencies: Managing the Bureaucracy. This is the chapter that proposes reviving Schedule F, an executive order that would identify positions that could be designated as exempt from the civil service rules protecting federal employees so that those people could be removed without cause, and replaced by political appointees.
Schedule F is only one way that Project 2025 envisions restructuring federal sector employment. Despite court consent orders requiring certain hiring, pay, and performance evaluation practices, the Heritage Foundation proposes re-introducing civil service testing and punitive performance evaluations, reducing federal pay and benefits, and “streamlining” appeals processes. The authors note that the Merit Services Protection Board (MSPB) “faces a backlog of an estimated 3,000 cases of people who were potentially wrongfully terminated or disciplined as far back as 2013. From 2017–2022 the MSPB lacked the quorum required to decide appeals. On the other hand, as of January 2023, the EEOC had a backlog of 42,000 cases.” (page 75)
I’ve had cases that were stayed because of pending appeals at MSPB. Contrary to their assertions, employees cannot pursue appeals on multiple tracks at the same time, and with a few exceptions, cannot have contrary findings at different appeal boards. In addition, the federal employing agency wins 80% of the time at the MSPB! The problem is not the appeals process; it’s the failure of President Trump (as 45th president) to appoint and Congress to approve new members to the Board so that there could be a quorum. There’s been a quorum since President Biden filled the Board.
Notwithstanding the government’s success with removing poor performing employees at MSPB, Project 2025 argues: “the real problem is the time and paperwork involved in the elaborate process that managers must undergo during appeals. This keeps even the best managers from bringing cases in all but the most egregious cases of poor performance or misconduct. As a result, the MSPB, EEOC, FLRA, and OSC likely see very few cases compared to the number of occurrences, and nonperformers continue to be paid and often are placed in nonwork positions.” (page 75)
This pronouncement is so overbroad that I’m not able to accurately analyze it. In my experience with federal cases (USPS, IRS, VA and NMB), most managers are perfectly capable of removing employees for misconduct, and federal unions rarely bring those cases to arbitration or appeal unless there’s a mitigating factor or obvious factual issue. As for poor performance, that’s not limited to the federal government, and won’t be reformed by labor law reform. Managers often prefer a low performing employee to no employee at all, are aware that there are other circumstances that are contributing to poor performance that prevent removal, or are just not very good at performance management.
During his first term, “President Trump issued three executive orders:
Executive Order 13836, encouraging agencies to renegotiate all union collective bargaining agreements to ensure consistency with the law and respect for management rights;
26 Executive Order 13837, encouraging agencies to prevent union representatives from using o cial time preparing or pursuing grievances or from engaging in other union activity on government time;
Executive Order 13839, encouraging agencies both to limit labor grievances on removals from service or on challenging performance appraisals and to prioritize performance over seniority when deciding who should be retained following reductions-in-force.
(page 81). We should expect to see those executive reinstated, along with Schedule F. Project 2025 also suggests making the Director of OPM (Office of Personnel Management) a Cabinet-level position so that political appointees are more swiftly approved by Congress. (page 83)
Project 2025 also envisions Congressional legislation that will eliminate the right to bargain collectively for federal employees, citing a book that questions the constitutionality of public sector unions. (page 83) It’s safe to assume that argument will be made at the Supreme Court before the next presidential election.
The second relevant section of Project 2025 is Chapter 18: Department of Labor and Related Agencies. This is a long section that is concerned with:
Ending anti-discrimination laws for all employees and “DEI” measures taken within the federal government.
Supporting “pro-life” workplace policies for mothers.
Increasing protection for religious freedom in the workplace.
“EEOC should disclaim its regulatory pretensions” (p. 586)
Refocus policy on “Good of the Family”
Bureau of Labor Statistics should collect data on families
Requiring time and a half for work on “the Sabbath.” (p. 589)
Roll back DOL and NLRB rules on independent contractors and joint employer status. I suspect they also hope to roll back restrictions on non-compete agreements.
A lot of these issues don’t impact labor arbitration; I just note them so that readers can get a sense of just a few of the proposals related to private sector workplace governance that we might see in the next administration.
As it relates to unions, chapter 18 has several proposals that are not necessarily compatible with one another, which is reflective of the uncertainty that conservative policymakers have about how to address their concerns about private sector unions. One proposal would amend NLRA Section 8(a) to permit employer-run unions. (p. 599) Another proposal would end the requirement of exclusive representation, so that unions wouldn’t have to represent non-dues payers. (Id.) What Project 2025 does agree on is limiting Section 7 rights; increasing “transparency” into union budgets and governance (already federal law); ending card check agreements; giving the NLRB jurisdiction to enforce unions’ duty of fair representation; rolling back worker-friendly Board rulings; end Project Labor Agreements; permit waivers of federal labor law for state and local governments; reduce occupational safety oversight.
This summary only covers the first two-thirds of Chapter 18 and doesn’t include every idea that is proposed. Given that some proposals contradicts others, it’s fair to assume that the next administration will not be able to act on all of them.
The impact of all this on labor arbitration is unclear: Will we have fewer cases because the repeals/reforms further erode union density, or will we have more cases, as unions and employers opt to resolve the differences in private dispute resolution? I suspect there will be regional and industrial differences and no clear consensus within the administration about whether to expend legislative capital to achieve this agenda. However, even small changes are likely to have dramatic downstream effects for union advocates and HR representatives in the union workplace. Finally, remembering that labor arbitration is an alternative to strikes, please note that efforts to weaken collective bargaining are likely to result in an increase of workplace actions and labor instability.
After all that, if you are interested in becoming a labor arbitrator, the Federal Mediation and Conciliation Service is holding their Becoming A Labor Arbitrator training January 13-17, 2025, (before the inauguration!) in Las Vegas. This course is a little pricy ($3000) but absolutely worth the investment if you are considering the career change. If a new arbitrator starts on the ground floor, this class gets you much further - third floor? fourth floor? Anyway, you get the metaphor! Please reach out if you decide to go; I’m always interested to hear about new arbitrators.
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