Guideline Memorandum Concerning Deferral to Arbitral Awards, the Arbitral Process, and Grievance Settlements in Section 8(a)(1) and (3) cases

GC 15-02 02/10/2015 12:00 AM EST

 I. Introduction:

In its seminal decision in Spielberg Manufacturing Co.,1 the Board decided that it would defer, as a matter of discretion, to an arbitrator’s decision in cases where the arbitral proceedings appear to have been fair and regular, all parties agreed to be bound, and the arbitrator’s decision was not clearly repugnant to the purposes and policies of the Act. After some years of experience applying Spielberg, the Board expanded on that test by requiring an arbitrator to have considered the unfair labor practice issue (i.e., the “statutory issue”).2 In Olin Corp.,3 the Board relaxed the consideration requirement, holding that it was satisfied if the contractual and statutory issues were factually parallel and the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice. In addition, Olin placed the burden on the party opposing deferral to demonstrate that the deferral criteria were not met.4

In Babcock & Wilcox Construction Co.,5 the Board revisited Olin and held that the existing postarbitral deferral standard did not adequately balance the protection of employee rights under the Act and the national policy of encouraging arbitration of disputes over the application or interpretation of collective-bargaining agreements. The Board reasoned that the existing standard created excessive risk that the Board would defer when an arbitrator had not adequately considered the unfair labor practice issue, or when it was impossible to tell whether that issue had been considered.

In order to adequately ensure that employees’ Section 7 rights are protected in the course of the arbitral process, Babcock announced a new standard for deferring to arbitral decisions in Section 8(a)(1) and (3) cases.6 In so doing, the Board also modified the standards for prearbitral deferral and deferral to grievance settlements in these types of cases. This memorandum explains these new standards, describes the circumstances in which they apply to pending and future cases, and provides guidance on handling cases that implicate these issues.

II. Postarbitral Deferral:

Under Babcock, deferral to an arbitral decision is appropriate in Section 8(a)(1) and (3) cases where the arbitration procedures appear to have been fair and regular, the parties agreed to be bound,7 and the party urging deferral demonstrates that: (1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law “reasonably permits” the arbitral award.8 The meaning of each of these three new prongs in the postarbitral deferral test is discussed in more detail below. It is important to underscore that Babcock places the burden of proving that the deferral standard is satisfied on the party urging deferral, typically the employer, which is another significant change from the Olin standard.9

B. Explanation of the Babcock Requirements

1. Explicit Authorization

Under Babcock, an arbitrator must be explicitly authorized to decide the statutory issue in order to defer to the arbitral award. This requirement can be met by showing either that: (1) the specific statutory right at issue was incorporated in the collective-bargaining agreement, or (2) the parties agreed to authorize arbitration of the statutory issue in the particular case.10

Significantly, the Babcock standard treats explicit authorization as a threshold requirement, that is, deferral is never warranted if this requirement is not met. The Board reasoned that arbitration is a consensual matter and it will not assume that the parties have agreed to submit statutory claims to the grievance process. Consequently, each party to a collective-bargaining agreement has the prerogative to decide not to arbitrate statutory claims by refusing to agree to a contract incorporating the statutory right or to otherwise agree to arbitrate the statutory issue.11 That is, a party will retain the option of adjudicating a statutory claim before the Board in the event the arbitrator denies the grievance where the collective-bargaining agreement is silent as to the statutory right and the party refused to authorize arbitration of the claim in the particular case.