Binding Arbitration Q&A

Published: Mar 7 2018 7:54PM

1. What is Binding Arbitration?

Arbitration is a process where the two parties bring their dispute to a neutral individual who issues a ruling in favor for one side or the other or fashions a compromise settlement.  The term “binding arbitration” simply means that the neutral’s decision is final and “binding” on the parties as though they reached agreement voluntarily.

2. What is the process that got us here, we've never heard of this option?

Arbitration is one of the steps provided in the Railway Labor Act to resolve a bargaining dispute.  The first step in the process is the service of a “Section 6 Notice” on the other party.  The notice gets its name from Section 6 of the Railway Labor Act.  After notices are served, the parties meet and attempt to reach an agreement.  At anytime during that process, one of the parties can request the National Mediation Board (a federal agency) to intervene and try to help the parties reach an agreement.  The Railroads requested the NMB’s involvement in December 2016.  Under the Act, when the NMB declares an impasse (which is where we were headed) it “proffers” binding arbitration under Section 7 of the Act. If either party rejects the proffer, the parties are “released” from mediation. In railroad industry national bargaining that means a PEB will be appointed. While in mediation, the Unions and the Railroads, with the assistance of the NMB, agreed to arbitrate their dispute in a manner somewhat like Section 7 arbitration but in a less structured way and where the parties have more control of the process.

3. Why weren’t we asked if we wanted to go to Binding Arbitration? / Who made the decision to go to Binding Arbitration?

The Bargaining Committee of the BMWED composed of all the General Chairpersons with Railroads in this round of bargaining, the Vice Presidents and the President and the SMART-Mechanical Bargaining Committee made the decision unanimously.

4. Why is it better than a PEB? / What is the benefit of Binding Arbitration vs. PEB?

As stated earlier, arbitration provides a final resolution of the dispute made by an individual with experience in handling and resolving these types of bargaining disputes.  A Presidential Emergency Board (PEB) is established under Section 10 of the Railway Labor Act and its members are appointed by the President.  There is no set of qualifications for serving on a PEB, nor are the number members of a PEB set in stone. The most important distinction is that a PEB only makes recommendations that are not binding on the parties.  After the PEB issues its recommendations, the parties meet for up to 30 days to try to reach an agreement.  If no agreement is forthcoming, either party can engage in economic self-help -- which means a strike for the Union or a lock-out for the Railroad.  At that point Congress will become involved and will legislate the end of the dispute, as it has consistently done in large disputes that would have significant economic impact).  In most cases Congress simply imposes the PEB recommendations, but Congress has the Constitutional authority to impose anything it believes will settle the dispute; it can ignore the recommendations of the PEB and impose the terms proposed by either party or something completely different. And the scope of the legislation is not limited to the subjects in dispute in the bargaining.  In other words, the agreement will be the product of 535 individuals on Capitol Hill, all with different political agendas and views of what is an “acceptable” labor settlement.

5. How is a Binding Arbitration Board chosen?

This arbitration board was created by an agreement between the Unions and the Railroads.  The process will involve 2 days of hearings.  Each side will be represented by counsel and each side will present expert testimony in support of their respective positions.  The agreement provides that an award will be issued within 15 days after the close of the hearing.

6. What happens if we get a bad arbitrator and get ruled against? 

We have attempted to limit the pool of potential arbitrators to ones proposed by the parties who are generally recognized as experienced arbitrators, and to structure the selection process to decrease the odds of getting a bad arbitrator (in a PEB we have no say in who is appointed). As stated earlier, the arbitrator’s decision is final and binding.  If we win, it’s over.  If we lose, it’s over.

7. Can we reject the Board’s decision?


8. Do we get to vote on this?

The Unions have one “partisan” member of the panel, the Railroads have one “partisan” member, the vote of the neutral and one “partisan” member makes a final award.  There is no rank and file vote on accepting or rejecting the arbitration decision.

9. Is there any recourse after the arbitration by either us or the Carrier?

Not really.  Any review would be in court and the Supreme Court has called the scope of review of an arbitration among the narrowest known in the law.

10. If this is the way to go, why didn't the other crafts do it?

The other crafts, like BMWED and SMART-Mechanical, make their own decisions.

11. Can we strike if we don’t like the Board’s decision?


12. Will Binding Arbitration give us a better chance to keep health care as it is today?

The BMWED and SMART-Mechanical bargaining committee believe arbitration gives us the best shot to keep health care as it is today.

13. Can we ask for better wage increases during this process?

The arbitration agreement accepts the CBG wage increases.  The dispute to be arbitrated relates to the change in healthcare costs in the CBG agreement.  We propose the 357 Plan as an alternative that provides savings equal to or greater than the CBG healthcare changes.  The arbitration agreement notes that issues regarding differing valuations may be adjusted in some fashion.

14. Can we ask for other benefits that were not part of the original proposal?

The arbitrated agreement will cover wage and health and welfare only and ends this bargaining round.  The next round of bargaining will begin no later than January 2020 and that will be the time to bring new issues to the bargaining table.

15. Will we get back pay?


16. Will the Railroads be able to change their proposal during this process?

The Railroads will contend the CBG agreement in its entirety is the correct decision for the arbitration panel.

17. Are there any limits to the arguments that can be made concerning health care and wages?

The Unions and Railroads may make any arguments they believe advance their cases in arbitration.

18. How long will this process take?

We expect a final decision by the end of May.