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Arbitration Process & Costs

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Labor Relations

  • Format: Self-paced
  • Course Duration: 1 hr 42 mins
  • SHRM Professional Development Credits: 1.50
  • HRCI General Recertification Credits: 1.75
  • Certificate of Completion (after passing quiz)

The day has come…union officials are now able to represent your employees. The workforce voted to unionize! Now what? Taking on the task of developing and maintaining a collective bargaining agreement is nothing to fear! This course is for HR professionals who need to understand the basics of a collective bargaining agreement process and its enforcement in the United States. The lessons will provide an introduction to the world of U.S. labor relations including a review of specific terms and labor law. Labor relations is a fun topic but it could be a little scary for those who are new to it. Take this course and put your mind at ease.

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Title: Arbitration Process & Costs
Module: Enforcing an Agreement
Duration: 3:41

Let’s go back to the third step of the grievance procedure. The VP of HR or the Director of Labor Relations make a case, and determine that the grievance decision is being upheld. The union could do two things. They can accept the answer or they can file an arbitration. An arbitrator is a person who is not related to the union or the company who will listen to the case and make a decision. Arbitration is not as formal as litigation. It is a process where once an arbitrator makes its ruling, for the most part, it’s binding.

An arbitrator is someone who has been either studying or has lived labor relations for most of their career. They don't have to be an attorney but are someone who has been dealing with labor relations either on the management or labor side.

There is a lot of preparation that goes on before the case is heard. Both parties will put their facts together. The union will try to prove there is no just cause and management is doing the opposite. The parties come in and present their case to the arbitrator. Afterwards, both sides can write up a brief during the following 30 days for the arbitrator to review. Then, after hearing both sides of the case and reviewing the contract, the arbitrator remedy their award. They have the ability to do whatever they feel is justifiable. It could be the person is being brought back to work with no pay, suspension as time served. Or the ruling could be that a person is coming back to work and they will get their time, money and seniority back.

The cost of arbitration is not a cheap process. However, it’s a lot cheaper than litigation. An arbitrator's fee ranges anywhere between $1500 to $3000 a day depending on the case. And the case could last more than a day. It depends on the number of witnesses, statements and all the exhibits that are being brought forward in arbitration.

Then there’s the arbitrator’s expenses such as travel, accommodation and meals. This could be about a $1000 or more.

The administrative expenses are usually from the third party organization who organizes the dates and processes. This could range from $250 to $1000.

Then there are legal fees if the company is going to be represented by an attorney. It's not as simple as the attorney just coming in and meeting at the arbitration. There's a lot of preparation. The cost can range from ten to fifteen thousand dollars.

Adding this up, the cost is around $20,000 to fight an arbitration. I recommend trying to negotiate with the union before getting to arbitration. Try to settle the case either for monetary or non-monetary before it gets to an arbitration.

On a side note, you could have somebody out of work for 6 months to a year before the case actually gets to arbitration. Not only are you paying legal fees but the company could be at risk of back pay. The pay could include hourly rates plus overtime and pay differentials. If an employee would’ve made $70,000 in a year, the company would have to pay this, plus $20,000 for arbitration. That’s a total of $90,000. With that said, I still personally believe arbitration is cheaper and faster than litigation.


Instructor: Matthew Kerzner

As an accomplished professional with over 20 plus years of practice in all facets of organizational operations, Matthew’s expertise includes training and development, labor relations, and organizational development, in addition to the recruitment and selection of competent human capital.

Matthew graduated from Nichols College, with a BA in Industrial Organizational Psychology; and also obtained both an...

Matthew's Full Bio

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HR Jetpack® is an official SHRM Education Partner recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP or SHRM-SCP.

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