Decision Making in Employment and Labor Arbitration

Decision Making in Employmentand Labor Arbitration

Decision Making in Employment and Labor ArbitrationLISA B. BINGHAM and DEBRA J. MESCH

LISA B. BINGHAM and DEBRA J. MESCH*

This experimental study examined the labor and employment arbitration deci-sions of four groups of arbitrators: (1) employment arbitrators who resolvedisputes involving nonunion employees, (2) labor arbitrators who arbitrate casesin which an employee is represented by a union, (3) arbitrators in the NationalAcademy of Arbitrators (NAA), and (4) students as a comparison of nonarbitratordecision makers with experienced arbitrators. A 2 × 2 × 4 factorial design wasused, crossing arbitrator group with discipline standard and sex of the grievant.Results indicate that employment artibrators reinstate the grievant significantlyless frequently than other arbitrators; however, the findings also reveal that allarbitrators make more favorable decisions under a just-cause standard than underthe newer META standard of discipline.

EMPLOYMENT ARBITRATION IS emerging as a controversialmethod for resolving disputes between employers and employees not rep-resented by a union, whether these disputes arise out of an express orimplied contract of employment or are based on a statute such as Title VIIof the Civil Rights Act (Commission on the Future of Worker-EmployerRelations, 1994; Bethel, 1993). In employment arbitration, the employeemay or may not (1) be represented by counsel, (2) participate in draftingthe arbitration clause and underlying contract, and (3) participate inarbitrator selection (see generally, Dunlop and Zack, 1997); unions playno role in the process. In contrast, in labor arbitration, a union negotiatesthe contract containing the arbitration clause, generally has authority to

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*The authors’ affiliations are, respectively, School of Public and Environmental Affairs, Indiana Uni-versity, and School of Public and Environmental Affairs, Indiana University–Purdue University. E-mail:[email protected] and [email protected]. This research was supported in part by a grant from theIndiana University Research and the University Graduate School Intercampus Research Fund.

INDUSTRIAL RELATIONS, Vol. 39, No. 4 (October 2000). © 2000 Regents of the University of CaliforniaPublished by Blackwell Publishers, 350 Main Street, Malden, MA 02148, USA, and 108 Cowley Road,

Oxford, OX4 1JF, UK.

decide which cases go to arbitration, participates in arbitrator selection,and generally represents the employee in the arbitration hearing.

There has been substantial research regarding what predicts outcomesin labor arbitration cases, where employees are represented by a unionand the arbitrator interprets a collective-bargaining agreement. In general,researchers have examined the impact of arbitrator characteristics suchas gender (e.g., Bemmels, 1988a, 1988b, 1988c), age (e.g., Nelson andCurry, 1981), and arbitrator experience (e.g., Thornton and Zirkel, 1990;Zirkel and Breslin, 1995); the impact of grievant characteristics such asjob category, party resources, and representation by counsel (e.g., Blockand Stieber, 1987; Mesch and Dalton, 1991, 1992); and the impact of casefactors such as antiunion animus or work history (e.g., McCammon andCotton, 1990; Simpson and Martocchio, 1995), statutory criteria (e.g.,Bazerman, 1985; Dell’Omo, 1989), and normative criteria on arbitratordecision making (e.g., Hilgert, 1995). [For a review of the literature onlabor arbitrator predictability, see Thornton and Zirkel (1990), and foradditional review and a model of factors at work in labor arbitrator deci-sion making, see Crow and Logan (1995).]

There has been limited empirical research, however, on employmentarbitration, even though the use of employment arbitration continues togrow and commentators increasingly advocate employment arbitrationas a substitute for litigation of wrongful discharge, civil rights, anddiscrimination claims (Gould, 1987; Skrainka, 1993). While an earlierstudy found only 4 of 111 employers used outside arbitration in 1991(Feuille and Chachere, 1995), by 1995, the GAO found that 10 percent ofall employers with 100 or more employees use binding arbitration foremployment disputes, and as many as half of these may impose manda-tory arbitration as a condition of employment (U.S. General AccountingOffice, 1995). A recent survey of 92 companies showed that most wouldconsider using employment arbitration (McDermott, 1995).

While several researchers have studied labor arbitration outcomessystematically (e.g., Bemmels, 1990a; Dalton et al., 1995; Mesch, 1995b),there have been no studies comparing labor and employment arbitrationoutcomes. Todor and Owen (1991) suggest that there is value in compar-ing outcomes across dispute-resolution processes. They argue that mostdispute-resolution research has focused on microjustice, i.e., the percep-tions of parties within the dispute-resolution process, but the field alsoneeds a focus on macrojustice, i.e., differences in the pattern of outcomesproduced by various dispute-resolution programs.

In field studies, Bingham (1996, 1997, 1998) used a macrojusticeapproach to examine whether there is evidence of a structural bias in favor

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of employers in employment arbitration. She found no evidence of pro-employer bias based on whether the employer or employee was claimantor on whether the arbitrator was paid or served pro bono (Bingham, 1995).There was evidence that arbitrator decision patterns differed based on thearbitration rules under which the claim was filed (Bingham, 1996). More-over, there was evidence that when the employer is a repeat user of arbitra-tion, the employer had superior outcomes (Bingham, 1997, 1998). Theemployment category (white, blue, or pink collar) of the employee alsoaffected outcomes; white-collar employees fared better in employmentarbitration than blue- or pink-collar workers (Bingham, 1997). Like Bing-ham, Howard (1995) used a macrojustice approach in a field assessmentof mean damage awards in discrimination cases. He compared litigatedand arbitrated outcomes and found that damage awards were lower inemployment arbitration than in litigation.

The work of Ury et al. (1989) gave rise to a new field of dispute systemdesign, as a result of which employers make differing choices regardingfeatures of their employment dispute-resolution program. These choicescan include the source of the arbitrators and the scope of what is to bearbitrated—in other words, a decision standard. A macrojustice assess-ment is important in examining how dispute system design choices affectthe way that dispute-resolution procedures operate. Bickner et al. (1997)conducted a survey among employers to examine what dispute systemdesign features they were using in their employment dispute-resolutionplans. They found that plans varied in what was subject to arbitration.About 25 percent of the plans limited arbitration to terminations involv-ing “legally protected rights.” Another 20 percent of the plans limit arbi-tration to “claims that would otherwise be litigated in the courts” (Bickneret al., 1997:78). A few plans allowed arbitration only for claimed viola-tions of human resources policies or procedures. This is evidence thatthere is variation of decision standard within arbitration. In addition,Bickner et al. (1997) found that there was variation in how the arbitratorwas selected. While 85 percent of the plans provided for joint selection ofthe arbitrator, 15 percent provided for employer selection only or selec-tion by the American Arbitration Association (AAA). In particular, manyemployers expressed a preference for attorney arbitrators, and a minorityof those surveyed expressed reluctance to use labor arbitrators in anemployment arbitration plan (Bickner et al., 1997:80). This study exam-ines two aspects of dispute system design—arbitrator type and decisionstandard—to determine how these affect the function of arbitration. Thepurpose of this study is to examine arbitration decision making underseveral dispute-resolution conditions. Each is described below.

Decision Making in Employment and Labor Arbitration / 673

Arbitrator Type as a Factor in Decisions

Parties generally investigate labor arbitrator backgrounds and useinformation to select arbitrators (Bloom and Cavanagh, 1986; Briggs andAnderson, 1980; Thornton and Zirkel, 1990). In labor arbitration, theywill strike a predictably biased arbitrator (Thornton and Zirkel, 1990). Asemployment arbitration has developed, practices of major providers andorganizations have evolved as to who should be on the relevant arbitra-tion panel. The National Academy of Arbitrators (NAA) debated whetherits members should participate in nonunion employment cases and hasissued a policy statement and guidelines allowing for such participation(National Academy of Arbitrators, 1997). Employer users of employmentarbitration have expressed strong preference for excluding labor arbitra-tors (including members of both the Labor Panel and NAA) due to theperception that labor arbitrators would take a broad view of their powersand hence favor employees (personal communication with representa-tives of AAA; Denenberg and Denenberg, 1995). On the other hand,members of the plaintiffs’ bar criticize the employment arbitration panelsused for disputes in the securities industry because they are composedalmost exclusively of males over age 60 (i.e., Vladeck, 1995:7) and pre-sumably favor employers. As a result, in 1996 the AAA created a newpanel of arbitrators, the Employment Disputes Panel, through a methodof outside regional committee review and selection. The committeeswere comprised of highly regarded members of the defense and plaintiffs’bar in employment litigation. With some exceptions, the committeesgenerally excluded labor arbitrators from the new panel. The new panelreplaces the former AAA Commercial Subpanel for employment dis-putes, which served as the pool of employment arbitrators until 1996.However, there is no empirical evidence to support this grass roots move-ment to keep separate labor and employment arbitrators.

Some research on labor arbitration suggests labor arbitrators may takea broader view of their role than employment arbitrators. Hilgert (1995)observed that in all labor grievance arbitration, arbitrators use certainstandard factors or professional norms as decision criteria; these includethe intent of the parties, past practice, and fairness and equity (the latterparticularly in discipline cases involving just cause). Labor arbitrators arepart of a dispute-resolution process embedded in a continuous relation-ship between union and management. Employment arbitrators generallyresolve the terminal dispute between parties to a relationship that hasended, specifically the relationship between employer and individualemployee.


Arbitrator characteristics. There is a body of research on labor arbi-tration outcomes as a function of the arbitrator characteristics such asage, education, and experience. Bemmels (1991a) and Nelson and Curry(1981) found that more experienced arbitrators tended to decide eithercompletely in favor of the grievant or the employer, whereas less experi-enced arbitrators tended to render compromise decisions. Oswald (1991)found significant differences between the decisions of students and prac-ticing arbitrators when deciding a drug-testing case but not when given asexual harassment case. In the drug-testing case, students were morelikely to overturn the dismissal of a female grievant than were practicingarbitrators. In the sexual harassment case, there were no significant differ-ences between the two groups. Oswald and Caudill (1991) found thatmore experienced arbitrators were harsher on the grievant than less expe-rienced arbitrators in a sexual harassment case. Yet some researchershave found that inexperienced arbitrators arrive at the same decisions asexperienced ones [e.g., Fleming, 1967; Heneman and Sandver, 1983;McCammon and Cotton, 1990; Thornicroft, 1989; Thornton and Zirkel,1990; Westerkamp and Miller, 1971; Zirkel and Breslin, 1995 (inexperi-enced arbitrators represented only 4 percent of the sample)].

Research on a labor arbitrator’s educational background has likewiseproduced mixed results. Several studies have found that education wasnot significantly related to arbitration outcomes (McCammon and Cotton,1990; Nelson and Curry, 1981; Heneman and Sandver, 1983; and Zirkeland Breslin, 1995). However, Oswald and Caudill (1991) found that moreeducated arbitrators were harsher on the grievant than less educated arbitra-tors in a sexual harassment case. Bemmels (1991b) reached a similar con-clusion, finding that arbitrators with Ph.D.’s were less likely to awardreinstatement than arbitrators with masters or law degrees. However, thepercentage of variation in outcomes explained by arbitrator was very small.

While there has been research on the quantity of arbitrator experiencemeasured in years or number of cases and on education, there has beenlimited research comparing arbitrator decision making across arbitratorswith different kinds of arbitration experience. McCammon and Cotton(1990) examined arbitrator type, defined as single ad hoc arbitratorscompared with permanent arbitrators or arbitration boards, and found nosignificant differences in the outcomes of subcontracting disputes. Arbi-tration panels, as pools of individual arbitrators selected based on theirbackgrounds, may reflect collective systematic differences in experience.Membership in the NAA is a prestigious credential much sought after bylabor arbitrators. Selection criteria include extensive arbitral experience(50 to 100 cases). Arbitrators may be admitted to the AAA and Federal


Mediation and Conciliation Service Labor Arbitrator Panels with five orfewer cases. Traditional standards for employment arbitrator membershipon the former AAA Commercial Panel for employment disputes included10 years of law practice experience. The panels may reflect differencesnot only in the quantity of experience but also in the nature of that experi-ence. A labor arbitrator may have less experience with statutory claims(based on Title VII, the Age Discrimination in Employment Act, theAmericans with Disabilities Act, etc.) than an employment lawyer on theformer Commercial Panel.

Thus anecdotal perceptions of differences between labor and employ-ment arbitrators are shaping the pools of arbitrators available for a grow-ing body of employment arbitration cases. Do employment arbitrators,who generally are less experienced arbitrators with a background in lawpractice, tend to decide the typical discipline case differently from laborarbitrators? Based on the preceding review of the literature, we hypothe-size that there will be differences. Employment arbitrators likely will takea more narrow view of their power than labor arbitrators. They will readany underlying employment contract more narrowly than a labor arbitratorreads a collective-bargaining agreement. They will not see the underlyingemployment contract as a quasi-legislative charter for a continuing rela-tionship, which is the way labor arbitrators view collective-bargainingagreements. Thus they will be less likely to overturn an employer’s deci-sion to dismiss the employee. This leads us to the following first twohypotheses:

H1: Employment arbitrators will reinstate the grievant less oftenthan NAA and labor arbitrators.

H2: Employment arbitrators will order back pay awards less oftenthan NAA and labor arbitrators.

Decision Standards

Part of the debate at the policy level over labor arbitrators versusemployment arbitrators in dismissal cases concerns their expertise withconstruing statutory standards compared with the more general collective-bargaining standard of just cause. Much of the growth in the use ofemployment arbitration involves statutory disputes, e.g., claims of prohib-ited race, sex, age, or disability discrimination (Dunlop and Zack, 1997).Much of the research on arbitrator decision making concerns either fieldstudies of dismissal cases or experimental studies using a hypothetical


dismissal case. By limiting a field study to dismissal, researchers controlfor one source of variability in the data, namely, the merits and decisionstandard of the arbitration case.

A number of studies have examined the factors that go into labor arbi-trators’ application of just cause. Just cause is a term of art that the contractdoes not define; it has been given meaning by labor arbitrators over theyears through a body of case law in arbitration (Elkouri and Elkouri,1991). Labor arbitrators have interpreted the just cause standard to includeby implication certain norms, e.g., the seven elements of the Daughertytest, which include reasonable performance standards, notice, investiga-tion, proof, even-handed administration of discipline, and a penalty pro-portionate to the offense in light of the employee’s work history (Hill andSinicropi, 1991:139–140). A number of studies have found that thesenorms are associated with outcomes for one party. For example, arbitratorsare almost certain to deny a grievance over dismissal for absenteeism ifmanagement shows adequate notice, proof, equal treatment, and appro-priate penalty (Clay and Stephens, 1994). Prior work record, mitigatingcircumstances, and arbitrary action by public-sector management are sig-nificant factors for cases where arbitrators modify an employer’s decisionto discharge the employee (Karim, 1993). Bohlander (1994) found lack ofevidence, mitigating circumstances, procedural errors in case handling,overly harsh punishment, and management being partly at fault all to bedecision criteria tending to lead arbitrators to reverse public-sector manag-ers’ decision to suspend or dismiss an employee. In medically based griev-ances, Leap and Stahl (1985) found that arbitrators were influenced bygood work record and seniority, two elements of just cause, in determiningwhether to uphold dismissal. Thornicroft (1989) found that the burden ofproof accounted for differences in outcomes of drug- and alcohol-relateddismissal cases. An arbitrator’s attributions of responsibility may have animpact on arbitration outcomes in cases where the employer has disci-plined the employee (Bemmels, 1991a). Cain and Stahl (1983) found laborarbitrators to be quite consistent in their application of decision criteria.

In contrast, there is some evidence that employment arbitrators mayapply standards for dismissal that depart from traditional just cause, evenwhile they use “just cause” language. Bingham (1996) found that anemployment arbitrator defined just cause as requiring the employee toprove that the company was discriminatory, arbitrary, or capricious inarriving at its decision to terminate and that the bad conduct of thecompany must be such that it shocks the conscience of the arbitrator.This placed an extraordinarily high burden of proof on the employee, in


contrast to the traditional definition of just cause, which places a moder-ate burden of proof on the employer.

To explore and compare labor and employment arbitrators’ use of astatutory standard, we chose the Model Employment Termination Act(META) standard of “good cause.” A variety of reasons dictated thischoice. The META is a current proposal for uniform state legislation inthe policy arena of dismissal from employment, a draft model state lawprepared by a committee of the Commissioners on Uniform State Laws.It would alter the current common-law employment-at-will doctrine inexchange for employee arbitration of all claims (Seidman and Aalberts,1993). The drafters struck a compromise; employers yield some of theirdiscretion to dismiss an employee-at-will for any reason or no reason atall in exchange for freedom from exposure to protracted and expensiveemployment litigation (Gould, 1987). Under the META, employees maytake legal claims against employers to arbitration instead of to court (Foxand Hindman, 1993). Thus a study of how arbitrators apply the proposedstatute has usefulness for policymakers.

Moreover, the META provides a statutory standard that is analogousto the collective-bargaining standard of just cause, in that it is a generalstandard for dismissal. The META defines good cause as

An employer may not terminate an employee without good cause. “Good cause”is defined as (i) a reasonable basis related to an individual employee for termina-tion of the employee’s employment in view of relevant factors and circum-stances, which may include the employee’s duties, responsibilities, conduct (onthe job or otherwise), job performance, and employment record, or (ii) the exer-cise of business judgment in good faith by the employer, including setting itseconomic or institutional goals and determining methods to achieve those goals,organizing or reorganizing operations, discontinuing, consolidating, or divest-ing operations or positions or parts of operations or positions, determining thesize of the work force, and determining and changing standards of performancefor positions.

This standard differs from just cause at least on its face; just cause is aterm of art without further definition and applies to discipline based on anemployee’s conduct. Good cause has a detailed statutory definition thatlooks at employee conduct but also includes business judgment, institu-tional goals, reorganization, and other factors unrelated to an employee’sperformance.

There has been no empirical research done on this standard to determinewhether arbitrators will apply it in a way that produces outcomes similar toor differing from those produced by just cause. In fact, because it is a morenarrowly defined standard for dismissal and is not as general and opento interpretation as the term just cause, it is likely that the outcomes will


differ. It is likely that arbitrators will take a broader view of their remedialpowers under just cause than under the META good cause. This wouldmean that they will be more likely to reinstate employees and awardback pay under just cause than under META good cause. In addition, theMETA affords an opportunity to compare how labor and employmentarbitrators handle a statutory standard. Scholars have observed that laborarbitrators tend to interpret such terms as cause, reasonable cause, goodcause, proper cause, justifiable cause, obvious cause, and the like all tomean the same thing as just cause (Elkouri and Elkouri, 1991:652). TheMETA standard affords a means to test this observation.

Based on the preceding rationale, we hypothesize

H3: Reinstatement will occur more often under the just cause con-dition than under the META good cause condition.

H4: Back pay awards will occur more often under the just causecondition than under the META good cause condition.

Literature on Sex-Based Differences

Research in the organizational literature suggests a bias against womenin the workplace and that a pattern of discrimination persists (Larwood etal., 1988; Shenhave and Haberfeld, 1992; Trentham and Larwood, 1998).Women fare far worse than men on a number of important organizationaloutcomes such as salaries (e.g., Gerhart, 1990; Gerhard and Rynes, 1991;Landau and Arthur, 1992), hiring and promotion (e.g., Jacobs, 1992; Katz,1987; Stroh et al., 1992; Tharenou et al., 1994; Tolbert and Oberfield,1991), selection (e.g., Binning et al., 1988; Hitt and Barr, 1989), perfor-mance evaluation (e.g., Dobbins et al., 1988), mentoring (e.g., Ragginsand Cotton, 1991), and discipline (e.g., Dalton et al., 1987). The reading ofthis work suggests that women are subject to unfavorable biases in eachcategory.

The criminology literature reaches a conclusion diametrically opposedto that expected based on the organizational literature. In much of thecriminal justice research, there has been a fairly persistent finding thatwomen are treated more favorably than men, receive less serious sanc-tions, and are less likely to be incarcerated (e.g., Chesney-Lind, 1987;Chilton and Datesman, 1987; Crew, 1991; Daly, 1994; Nagel and Hagan,1983; Steffenmeier et al., 1993; Wilbanks, 1986). This literature has ratherstrongly concluded that women consistently receive preferential treatmentat each stage of the criminal justice process and that “the paternalistic


thesis is considered virtually an iron law” (Steffensmeier, 1980:340).While much has been speculated and examined regarding criminatory fac-tors that differentiate women and men in their criminality, a recurringtheme is the extent to which women receive lesser sanctions than theirmale counterparts in the judicial system.

To further muddy the waters, the empirical research examining sexeffects specifically in the area of labor arbitration has produced inconsis-tent results. It has been reported that women are less likely to be sus-pended or terminated in disciplinary processes for alcohol (ab)use (Beyerand Trice, 1984), will be treated more favorably in the grievance process(Dalton and Todor, 1985a), more leniently in arbitration cases (Bemmels,1988a, 1988b, 1988c, 1990a; Ponak, 1987), and more leniently by studentarbitrators considering a drug-testing case (Oswald, 1991).

Mesch (1995a), however, analyzed cases taken to labor arbitration inthe public sector and found a potential sex bias against women. Herresults indicate that women tend to lose more cases and receive fewercompromise outcomes—even when controlling for the severity of thegrievance. Other work, however, reports no effects as a function of gen-der at the grievance stage or at labor arbitration (Bemmels, 1988b; Blockand Stieber, 1987; Crow and Logan, 1994; Dalton et al., 1995; Dalton andTodor, 1985b; Oswald and Caudill, 1991; Scott and Shadoan, 1989; Scottand Taylor, 1983; Thornicroft, 1995). None of the empirical work exam-ines gender of the grievant as a factor in employment arbitration, althoughthe popular press has speculated that the male-dominated panels woulddiscriminate against women (Vladeck, 1995), and some legal scholarsaccept this argument without empirical evidence (i.e., Sternlight, 1996).

The present study examines the issue of sex bias in the area of griev-ance arbitration. The research question addressed is whether or not thereare systematic differences in outcomes of labor and employment arbitra-tion as a function of sex. The “chivalry” hypothesis in criminology sug-gests that women receive less serious sanctions in the judicial system. Theorganizational literature is inconsistent with regard to these conclusions,as is the arbitration literature. The reading of this literature indicatesthat women and men are likely to be treated differently. However, giventhe inconsistency between the criminology, organizational, and dispute-resolution literature, it is difficult to hypothesize the direction of theseresults. Accordingly, we provide the following hypothesis regarding ourthird independent variable:

H5: There will be a difference in outcome (i.e., reinstatement andback pay award) as a function of the sex of the grievant.


Method

Subjects. The sample of subjects in this study was randomly selectedfrom the Labor and Commercial Arbitrator Panel address lists of the AAAand the directory of the NAA. In this study, the term labor arbitratorrefers to members of the AAA Labor Panel, excluding NAA members.NAA members are the elite of the labor arbitration profession and haveextensive experience; they were treated as a separate subsample. Theemployment arbitrators in this study are former members of the AAACommercial Panel before the new Employment Disputes Panel tookeffect, excluding those few arbitrators who also are listed on the LaborPanel or the NAA. A total of 743 subjects participated in this experiment:(1) 161 NAA arbitrators, (2) 210 labor arbitrators, (3) 188 employmentarbitrators, and (4) 184 students. All students who completed the ques-tionnaire were graduate students enrolled in a master’s degree program inpublic affairs.

The mean range of number of years served as an arbitrator by groupwas (1) 26 or more years for NAA, (2) 11 to 15 years for labor, and (3) 6to 10 years for employment. The mean age range of students who com-pleted the case questionnaire was 25 to 30. The mean range of number ofcases decided in a given year by each group was as follows: (1) NAA, 26or more cases; (2) labor, 6 to 10 cases; and (3) employment, 3 to 5 cases.Students had no arbitral experience. Eighty-seven percent of all arbitra-tors were male. Including students, 78 percent of all subjects participatingin this study were male.

Procedure. Subjects received a hypothetical case and questionnairedescribing either a male or female grievant who had been terminated fromemployment. Each arbitrator was mailed a case and questionnaire,whereas all students were allowed to complete the survey during classtime. The hypothetical case took approximately 30 minutes to complete.Arbitrators who did not return the questionnaire received a reminder post-card. The 559 of 1639 arbitrators who completed and returned the ques-tionnaire represent an overall response rate of 34 percent for professionalarbitrators: 31 percent for NAA arbitrators (161 of 517 surveys returned),37 percent for labor arbitrators (210 of 566 surveys returned), and 34percent for employment arbitrators (188 of 556 surveys returned). Theresponse rate for 184 students was 100 percent. There was no apparentpattern by region or demographics among the nonrespondents.

The hypothetical case was based on an actual unpublished case broughtto arbitration. Less than 1 percent of the sample’s arbitrators indicated


that the case did not reflect a realistic arbitration case. The case concerneda licensed practical nurse who was fired from a school for giving thewrong medication to a student (see Appendix 1 for the full text). Therewere several features of the case that made it useful. First, the incidentinvolved a first offense by an employee with a clean disciplinary record.Second, the offense arguably raised a safety issue. Third, the offenseinvolved caretaking of children. Thus an artful advocate could make per-suasive arguments for or against dismissal. It was a case that a reasonablearbitrator could decide either way. Subjects were asked to read the caseand make a decision as to the outcome of the arbitration hearing. Addi-tional questions concerning demographic information also were asked.

There were four versions of the case. In the first two versions, the casewas presented as a labor discipline grievance under a collective-bargainingagreement providing for just cause, with one version providing for amale grievant and the other providing for a female grievant. In the last twoversions, the case was presented as an individual, nonunion employmentgrievance under the META, with one version providing for a male grievantand the other providing for a female grievant. Thus half the cases dis-tributed represented traditional labor arbitrations and half representedemployment arbitrations; half the subjects received cases involving femalegrievants, and the other half received the male grievant version. A total of375 questionnaires were returned under the just cause standard and 368under the META. The sample size of returned questionnaires for malegrievants was 365 and for female grievants was 378.

Experimental design. A 2 × 2 × 4 between-subjects experimentaldesign was used to test the hypotheses. The first independent variable wasgroup type (i.e., NAA, labor, employment, student). Students wereincluded as a comparison group of decision makers who were not profes-sional arbitrators. The second factor was type of discipline standard (justcause or good cause). The standard was written at the beginning of thecase, and subjects were instructed to apply the standard when deciding onthe outcome of the case. The third factor was sex of the grievant. Subjectswere randomly assigned a case in which the grievant was either a male ora female nurse.

The above-described four versions of the case were designed to reflectthe independent variables being manipulated (i.e., just cause and goodcause standard crossed with sex of the grievant) and given to each groupof decision makers. The four groups of subjects (i.e., NAA, labor,employment arbitrators, and students) were randomly assigned to eachcase version. Each subject received one of the four case versions.


The dependent variables were the decisions made regarding the out-come of the case. Subjects were asked to decide if the grievant should bereinstated (yes/no), if back pay should be awarded (yes/no), and, if backpay was awarded, the amount of back pay (less than 1 week, 1 week, 2weeks, . . . 12 weeks/full back pay).

We expect that arbitrator characteristics could influence grievance out-comes; therefore, we included several control variables. Arbitrator expe-rience was measured as the number of cases decided in a year and thenumber of years as an arbitrator (categories for both variables were 0–2,3–5, 6–10, 11–15, 16–20, 21–25, 26 or more). Educational level was mea-sured using a categorical variable coded as (1) Ph.D, (2) J.D., (3) masters,and (4) bachelors. Occupation was measured using a categorical variablecoded as (1) full-time arbitrator, (2) lawyer, (3) professor, (4) student, and(5) other.

Analysis and Results

To test the hypotheses, we performed a logistic regression, which is theappropriate analysis when the outcome variables are dichotomous. Thedependent variables are reinstatement and back pay award. Table 1 showsthe means for each independent variable manipulated in the experimentalgroups for both dependent variables.

We first specified a regression model using only the three independentvariables that were manipulated in the experiment. We tested for maineffects as well as for all interaction effects. Since there were no signifi-cant interactions, only main effects were included in the final analysis.The regression model for grievant reinstatement is significant (chi-square= 11.13; significance = 0.048) and is shown in Table 2.

Reinstatement. The results of the model for grievant reinstatementshow support for H1. H1 states that employment arbitrators will reinstatethe grievant less often than NAA and labor arbitrators. As predicted, theresults of the logistic regression indicate that employment arbitrators rein-state the grievant significantly less often than the other groups. The NAA,labor arbitrators, and students, however, are not significantly differentfrom one another.

H3 also deals with grievant reinstatement as the dependent variable. H3states that reinstatement will occur more often under the just cause stan-dard than under the META good cause standard. We find support for thishypothesis as well. The results of the model shown in Table 2 indicatethat the grievant is reinstated more often under the just cause standard.



TABLE 1

MEANS FOR EACH INDEPENDENT VARIABLE ACROSS CONDITIONS FOR GRIEVANTREINSTATEMENT AND BACK PAY AWARDED

Grievant reinstatement

Group % Yes

Labor 72.1Employment 61.0NAA 73.32Student 70.32

Standard % Yes

Just cause 72.3META 66.0

Sex of Grievant % Yes

Male 69.4Female 68.9

Back pay awarded

Group % Yes

Labor 48.4Employment 45.6NAA 44.9Student 58.3

Standard % Yes

Just cause 49.4META 49.2

Sex of Grievant % Yes

Male 46.2Female 52.4

TABLE 2

LOGISTIC REGRESSION SHOWING PREDICTORS OF GRIEVANT REINSTATEMENT

Variable Beta Standard Error

Sex of grievant (male) 0.0171 0.1609

Standard (just cause) 0.3155* 0.1610

Decision-making group

Labor 0.4815** 0.2157

NAA 0.5460** 0.2345

Student 0.4436** 0.2217

Employment (excluded)

NOTE: The –2 log likelihood = 900.780, model chi square = 11.13, df = 5, significance = 0.048. Beta refers to the strength of the re-lationship between each predictor and the dependent variable. The standard error shows the variability of the beta coefficientaround its expected value. The –2 log likelihood, chi-square and significance level show that the overall model is good.

*p = 0.05.**p < 0.05.

Back pay. The regression model for back pay award is also significant(chi-square = 11.51; significance = 0.042) and is shown in Table 3.

H2 states that employment arbitrators will order back pay awards lessoften than NAA and labor arbitrators. The regression analysis shows nosupport for H2. The results indicate, however, that students are signifi-cantly more likely to award back pay than the three arbitrator groups.Employment arbitrators, however, do not order back pay awards lessoften than NAA or labor arbitrators.

H4 also deals with back pay awards as the dependent variable. H4states that back pay awards will occur more often under the just causestandard than under the META good cause standard. No support is foundfor this hypothesis. As shown in Table 3, no significant differences werefound for back pay award between just cause and META good causestandards.

Sex of grievant. H5 states that there will be a difference in outcome asa function of sex of the grievant. As shown in Table 3, the results of thelogistic regression indicate that sex of the grievant approaches signifi-cance for back pay award, suggesting that females are awarded back paymore often than males. No such effect is found for grievant reinstatement.

Model using control variables. The preceding analysis tests the effectsof our hypothesized predictors on our outcome variables. We did not,however, include the control variables in the first analysis because wewanted to test for the unique contribution of our independent variables onreinstatement and back pay. To test for the additional effects of the con-trol variables, we performed additional logistic regressions (Table 4).


TABLE 3

LOGISTIC REGRESSION SHOWING PREDICTORS OF BACK PAY AWARD


Sex of grievant (female) –0.2555* 0.1555

Standard (META) –0.0063 0.1555


Labor 0.1146 0.2133

NAA –0.0339 0.2297

Student 0.5378** 0.2168

Employment (excluded)

NOTE: The –2 log likelihood = 926.934, model chi square = 11.51, df = 5, significance = 0.042.*p = 0.10.**p < 0.05.

The regression model for grievant reinstatement is significant(chi-square = 38.596; significance = 0.0004) and provides additional sup-port for H3—less reinstatement for the grievant under the META goodcause standard than under the just cause standard. However, when wecontrol for arbitrator characteristics, we find no significant differencesbetween the arbitrator groups. This model also indicates that there aredifferences across arbitrator occupations. Further analysis indicates that(1) full-time arbitrators, (2) professors, (3) students, and (4) other occupa-tions are significantly different from lawyers. Lawyers are the least likelyto reinstate the grievant than the other groups, whereas professors are themost likely to reinstate the grievant.

For back pay award, the regression model that included the control vari-ables was significant (chi-square = 23.42; significance = 0.053), again


TABLE 4

LOGISTIC REGRESSION SHOWING PREDICTION OF GRIEVANT REINSTATEMENT WITHCONTROL VARIABLES


Sex of grievant (male) 0.0502 0.1674

Standard (just cause) 0.3972** 0.1673**


Labor 0.0333 0.2608

NAA –0.1219 0.3853

Student 0.2621 0.5191

Control variables

Years as arbitrator 0.0917 0.0620

Cases per year –0.0028 0.0666

Education level

Ph.D. –0.5377 0.3439

Masters 0.2445 0.3206

Bachelors –0.3832 0.3819

(Lawyer excluded)

Occupation

FT arbitrator 0.6211* 0.3455*

Professor 1.8691*** 0.5163***

Student 1.1791** 0.4699**

Other 0.8054** 0.3209**

(Lawyer excluded)

NOTE: The –2 log likelihood = 845.149, model chi square = 38.596, df = 14, significance = 0.0004.*p = 0.07.**p < 0.05.***p < 0.001.

suggesting that students award back pay more often than the professionalarbitrators (p = 0.07).

Amount of back pay. For the third dependent variable, amount of backpay, analysis of variance was used to test for differences in amount ofback pay awarded across conditions. No differences were found acrossany of the independent variables for amount of back pay awarded to thegrievant.

DiscussionAs hypothesized, employment arbitrators seem to take a narrower view

of their remedial powers than do labor arbitrators, including members ofthe NAA. They reinstate grievants less frequently than the other deci-sion-making groups in our study. This provides some experimental vali-dation for the anecdotal perceptions of employer advocates. However, wealso found that all arbitrators appear to be less likely to reinstate under theMETA standard than under a just cause standard, contrary to the commonwisdom of labor arbitration that arbitrators will treat just cause, goodcause, and reasonable cause as meaning the same thing. Finally, ourresults suggest some support for differences in sex of the grievant.Although not statistically significant, our results suggest that there issome positive bias toward women in the frequency of awarding back pay.These results, however, are inconclusive at this time. No such resultswere found for grievant reinstatement.

The hypothetical case was structured so that this was the employee’sfirst offense, and the employer had not engaged in any progressive disci-pline. Moreover, the offense reflected negligence under stress, not willfulor intentional misconduct. It is not surprising, then, that labor and NAAarbitrators would tend to reinstate more frequently, since their backgroundin the collective-bargaining relationship would give them an appreciationfor the notion of corrective discipline. Typically, a first offense not involv-ing dishonesty or willful misconduct will not warrant industrial capitalpunishment under the just cause standard, absent serious safety consider-ations. The hypothetical case did raise safety issues, since a nurse failed togive medication to the right student. There was no “right” way to decidethe case, and there is always substantial variability in arbitrators’ decisions(Thornton and Zirkel, 1990).

While labor arbitrators and NAA arbitrators may take a broader view oftheir remedial powers than employment arbitrators, they neverthelesswill distinguish between a general collective-bargaining standard and anarrower statutory one in a dismissal case. They do not ignore the


standard for dismissal when deciding the case but instead factor it intotheir analysis. As a result, there are systematic, statistically significantdifferences in outcome based on the standard for dismissal, even for laborarbitrators. Thus the perception that labor arbitrators will treat a statutorygood cause standard in the same fashion as a contractual just cause one isnot justified.

We found that when controlling for number of years as an arbitrator,cases per year, education, and occupation, there were no differencesbetween decision-making groups. This is not too surprising—we wouldexpect that these factors would account for most of the variance betweengroups. However, even when controlling for these factors, we found sig-nificant differences between standards—reinstatement occurs more oftenunder the just cause standard even when controlling for all the demo-graphic characteristics of the arbitrator groups.

Further analysis reveals that there is a significant difference betweenthe arbitrator groups and the nature of their occupations. Eighty percent ofemployment arbitrators are lawyers, which could account for the differ-ences in decisions made across arbitrator groups. We found that employ-ment arbitrators were the least likely to reinstate the grievant comparedwith the other groups and that lawyers were the least likely occupation toreinstate the grievant. Furthermore, employment arbitrators were the leastexperienced and decided significantly fewer cases than both the labor andNAA arbitrators.

Both these findings lend support to Todor and Owen’s (1991) thesis thatresearchers should examine macrojustice, i.e., the pattern of outcomesacross various dispute-resolution processes, as well as microjustice, i.e.,the effects on participants within a given dispute-resolution process. Boththe type of arbitrator and the decision standard are elements of dispute sys-tem design. These dispute system design features affect outcomes. Thisalso can provide useful information to policymakers considering adoptionof the META and proposals for self-regulation of employment arbitration.

Unfortunately, this study does not clarify the literature regarding sexdifferences in arbitrator decision making. Most of the empirical researchon gender and arbitration outcomes indicates that either women grievantstend to receive more lenient treatment than men or there is no differencein arbitration outcomes as a function of sex. Our study is consistent withthese findings.

Finally, students were more lenient in awarding back pay. This is con-sistent with and supports prior findings that more experienced arbitratorsare harsher on the grievant in a sexual harassment case (Oswald andCaudill, 1991), that inexperienced arbitrators are more likely to render


compromise decisions (Nelson and Curry, 1981), and that students aremore likely to overturn dismissal in a drug-testing case (Oswald, 1991).Arbitrators may develop greater confidence in their judgment over timeand be more willing to issue an award that has a negative impact on thegrievant.

Conclusion

Arbitration panels reflect the systematic differences in experience oftheir members. These differences in experience may yield significantdifferences in decision making. Decision making is responsive to thedecision standard, although there is significant variability in arbitrators’decisions when faced with the same case.

The design of the study lends strong support to our findings. Becausewe used an experimental design with random assignment to treatmentconditions, we have reduced the threats to internal validity. Furthermore,we are more confident in the generalizability of our results because thesubjects were practicing arbitrators. This study is one of the few experi-mental studies conducted on employment arbitration. Future researchefforts need to focus on the questions of how arbitrator decision makingin this emerging process is different from and similar to that of the morethoroughly studied labor arbitration process.

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APPENDIX 1

Hypothetical Case (One of Four Versions)

The following facts are not in dispute. Jane Doe is a licensed practicalnurse who works in a private nonprofit residential school for handicappedchildren, Newington Special School. Ms. Doe is assigned to the nurse’soffice at the school. Her duties include handling minor first aid needs, noti-fying parents when children are ill, administering prescription medicationsto children according to their doctors’ orders, and attending to any medicalemergencies. She is a member of a small bargaining unit that includes sixnurses distributed across three shifts. Ms. Doe is on the day shift.

Recently, the school fired Ms. Doe. Specifically, the school dismissedher because Ms. Doe gave antiseizure medication to a student who did notrequire it and failed to give the medication to the student for whom it wasprescribed. In her defense, Ms. Doe recounts the following events: OnMay 3, 1993, student X threw a large wooden block at student Y, causinga deep gash in student Y’s forehead that Ms. Doe determined requiredstitches. Ms. Doe notified the parents and drove student Y to a nearbyhospital for emergency room treatment. The parents met Ms. Doe in theemergency room of the hospital and were very agitated over their child’sinjury. Ms. Doe attended to student Y and the parents for the hour that ittook to complete treatment (eleven stitches). Ms. Doe then returned to theschool to finish her shift. Ms. Doe reports that she was preoccupied with


the events of the morning, and that her interaction with the parents hadbeen somewhat stressful.

Approximately 1 hour after returning from the hospital, Ms. Doe pro-ceeded to do her regular rounds, administering prescription medication tovarious students. The school has approximately 250 students, of which 40regularly receive medication during the afternoon round. Ms. Doe con-fused the identity of two students, both white males with dark hair anddark eyes, approximately 11 years old. Student A received the medication(an antiseizure prescription) but experienced no ill effects as a result. Stu-dent B failed to receive his seizure medication and experienced a seizurelater that evening. Although excessive seizure activity over a prolongedperiod of time may cause lasting injury, student B appears not to have suf-fered any lasting injury as a result of this specific seizure. The mix-up wasdiscovered when student B reported to the night-shift nurse that Ms. Doehad not given him the medication. A physician who qualified as an expertwitness testified that the seizure probably occurred because student Bfailed to take his medication. However, on cross-examination, the physi-cian conceded that he could not be absolutely certain of this.

Ms. Doe has been employed for a period of 2 years. She has a satisfac-tory performance record, with no prior incidents of discipline. Her perfor-mance evaluations indicate that she has performed competently in thepast. The school conducted an investigation into the incident and spokewith both students, the teacher, and Ms. Doe in the presence of her unionrepresentative. After the investigation, the director fired Ms. Doe.

Ms. Doe admits the facts described above but contends that her mistakewas understandable in light of the morning’s stressful events and that thereis no just cause for dismissal because a single incident is not grounds fordismissal. The school argues that the risk to students is such that it shouldnot be required to give Ms. Doe a second chance. It also contends that it isoften impossible to know when a nurse has given a student the wrong med-ication, and therefore, this may not be an isolated incident. Ms. Doe hasresponded that the school could institute a check system with the class-room teacher to avoid such mix-ups in the future. The teacher could berequired to verify the identity of the student for the nurse and could evenbe required to examine the prescription bottle. The school responded thatthis is an unreasonable burden to place on the classroom teacher andwould disrupt the educational process. Ms. Doe seeks reinstatement withfull back pay. She has had no other employment or income since her dis-missal 12 weeks ago. There are no other documented instances where anurse has given the wrong medication to a student at the school and thusno relevant past practice as to discipline.


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