Mock Arbitration Essays Example
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Labor relations are important to any organization. Labor relations define interactions between the staff and the management, which is a result of relationships between unions and employers. Unions normally take part in collective bargaining agreements on behalf of the employees (Natacha & Budin, 2008). However, these negotiations can sometimes break down or reach an impasse. At such times, one of the solutions is to refer the matter to arbitration. Arbitration is a dispute resolution mechanism done by a non-partisan third party who listens to the evidence provided by both sides and makes a decision (St. Antoine, 2010). This paper presents a mock arbitration between the CAC Company and the International Brotherhood of Electrical Workers (IBEW) Local 3.
CAC Company Representative
CAC Company is among the premier employers in its industry. The firm has a workforce of 42 employees who receive pay at competitive hourly rates. The firm’s wages range from $7.50 to $31.00 depending on the employee’s job and their seniority. This places the firm’s payments above the federal minimum wage rate of $7.25. The firm has a variety of staff. First are the electrical staff who work in the field. This staff works six days a week and their working hours are between 7 am and 4 pm. The second category of staff is the warehouse staff. These employees also have a six-day working week and their working hours are between 6am and 4pm. The third category of workers is the office administration staff. As is the case with the other two groups, they have a 6-day working week, from Monday to Saturday, with their working hours beginning at 8am and ending at 5pm.
The company, in addition to wages, also offers benefits to its employees. Such benefits include a Health Maintenance Organization health plan for employees. This refers to a plan where the employee gets their healthcare needs checked by a Primary Care Physician. This PCP is responsible for giving referrals in case one requires to see a specialist (American Association of Health Plans, 1996). However, in the case of an emergency, one may seek care from another health care provider or hospital. The company also offers a DMO or Dental Maintenance Organization plan for the dental needs of its employees. Under this plan, dental services are covered and are available where the employees go to a network of approved dentists. The company pays 55% of the contribution, and the employee pays the remainder. For family coverage, the employee bears the full cost.
Other benefits that are included are vacation time. This vacation time varies depending on the length of service to the organization. For employees who have a year of service, they are entitled to a weeklong vacation. Employees who have served the company for a period of seven years are entitled to 2 weeks leave while those who have 12 years of service qualify for three weeks’ leave. The company also provides sick time, which is one paid day per every six months of service. These benefits are available to an employee who has completed the 90-day trial period. This current contract is due to expire at the end of this month. Negotiations have been ongoing but have reached a stalemate. There are some potential black spots in these negotiations.
First, the issue of lunch hour being unpaid is sure to be a cause of disagreement. The next issue that might prove contentious is the absence of a refund policy for employees who go to college and gain relevant skills.
The other issue that may crop up is that of choice of healthcare plan. Since the employees are restricted to an HMO, plan and yet, are still paying for 45% of the contribution. In addition, they are also required to pay the whole amount for the family.
The total costs the company is incurring under the current program are a sum of the wages in addition to the cost of benefits provided. The company’s total wage cost at present amounts to $703.11 per hour. This is composed of $186.07 per hour for warehouse workers, $371.54 per hour for field employees and $145.5 per hour for office workers. In addition, the company has paid leave, which amounts to 15 weeks for the office workers, 11 weeks for the warehouse workers and 27 weeks for the field workers. This gives a total sum of 53 weeks of leave for the employees. In a week, the company’s employees work for a total of 168 hours; hence the total weekly wage is $118,122.48. Annually, this figure is $6,142,368.96. This then means that the total amount payable as leave benefit is $5,589,724.5. The employees also have two sick days a year hence a total cost of $1,653,714.72. The total cost of labor and benefits will then come to $13,385,808.18
The union of employees is, however, demanding a change in these terms. The employee's union has made a number of demands. First, they are demanding a review of the vacation policy. Here, they would like the accrued vacation time to be 1 week after a year of service, 2 weeks after 2 years of service, 3 weeks after 5years of service, 4 weeks after 7 years of service and for vacation time to accrue from year to year.
The second change demanded by the union is a change in the sick time policy. They would like to have one sick day per month and the sick days to accrue from year to year. The employees would also like to have personal time off policy, which would allow them 5 hours off each month to attend to personal issues such as school meetings.
In terms of benefits, the employees want employer benefits portion to increase to 70% and insist that the employer cover half of the family coverage. As far as the health plan is concerned, the employees would like to have freedom of choice between either an HMO or a PPO medical plan. They would also like to have a life insurance policy with a benefit equal to their annual salary. Another benefit demanded is a tuition reimbursement plan for employees who are attending school. This plan would refund them for obtaining relevant skills. The reimbursement rate demanded is 100% for an A grade, 75% for a B grade and 50% for a C grade. The other term that the employees want to change is the work schedule for warehouse staff to begin at 6am and end at 7pm. They also propose that office staff hours begin at 8:30am and end at 4:30pm and include a paid lunch period.
If implemented, the effects of this policy would be quite significant. First, we would have a rise in the leave hours to 107 hours. This would bring the total cost of paid leave to $75,232.77. Another effect is the change in working hours. This would cause the cost of wages of the warehouse employees to change to $109,685.16 per week. In a year, this gives rise to a figure of $5,703,628.32. The sick days would increase to 504 in a year, giving rise to a total cost of $9,213,553.44.
The firm offered a counter proposal accepting some terms and rejecting others outright. If the terms of the firm were to be acceptable, the following would be the financial result. The total cost of vacation hours would be $1,496,218.08. The sick time, on the other hand, would be 252 days, which would be a total cost of $4,961,144.16. Hence, the total labor cost would be $12,599,731.2.
IBEW is of the opinion that these terms are punitive and uncompetitive to workers. The union states that it is unwilling to compromise on any of the terms it has stated. The union insists on this stand because in the first instance, on the issue of working hours, the recommended working period is 48 hours a week, with a maximum period of 8 hours per day. This is in line with the International Labor Organizations provisions (American Association of Health Plans, 1996). However, this is not the case for the warehouse workers who are overworked. These employees are expected to report to work at 6am and leave at 4 pm. This is a ten-hour working day. Even with a lunch hour deducted, nine working hours remain an unacceptable provision.
The second reason relates to the percentage of contribution towards health benefits that the employer is making. The union demands that this percentage is increased. This is because; the rising costs of health insurance have led to increased premiums. Since many of the employees are at minimum wage or thereabouts, it is easy to see them becoming unable to pay these premiums. This would lead to them defaulting and possibly losing their insurance packages. This coupled with the fact that the company does not pay for the family coverage. Hence, the employees find themselves forced to dig deep into their pockets for the amount. Hence, we demand that the employer contributes to this. This will be in conformance with industry-wide standards and practices.
Another reason for the refusal to compromise on this is the issue of the type of health plan in use. The unilateral decision that only a HMO plan is allowable is at the very least unfair. The union has proposed that the employees have a choice about which plan they would like to use between the HMO and a PPO plan. It is imperative that the employees have a say in their healthcare since it is crucial to their existence. The employees have a right to choose their Preferred Provider Organization (Tresnowski, 1985). To force a choice upon them by stating that they must choose the HMO plan is being insensitive. In fact, this amounts to the denial of a fundamental freedom, the freedom of choice. This is enshrined in the Bill of Rights and hence to deny the employees this is to go against the constitution.
The next reason why the employees are disputing this lies in the issue of personal time off. Employees have a life away from work. This can be respected by them the right to address personal issues. It is a proven fact that when an employee is undergoing personal problems, they cannot produce consistent and quality output. Hence, the employees must be afforded ample time to deal with these issues. The terms of the present contract mean that an employee cannot even find time to mark personal and family landmarks. For instance, a parent cannot attend his or her child’s graduation ceremony. This is inhuman and extremely inconsiderate.
The next reason is the absence of a tuition reimbursement plan. This means that employees who use their hard-earned money to gain skills that they apply in their current jobs get no appreciation. This failure by the management to recognize that these skills benefit the company is demoralizing to the employees. It is a basic rule of international labor that an organization must provide employees with opportunities for personal and career advancement (Cooper, Fisk, & Labor Law Group (U.S.), 2005). An organization that fails to do this is failing its employees. This is the case here.
The company will not even remotely consider changing the health plan. On this, the status quo is to remain. This is because this model remains the most cost efficient and best structured. With a HMO, the company is able to negotiate for better rates with one doctor. This would be virtually impossible to do with each doctor if a PPO was in place (Tresnowski, 1985). Consequently, employees pay less for insurance. On the issue of cafeteria plan, the company will not consider it because it has higher administration costs and is likely to lead to higher claims. This could in turn render the plan unworkable, leading to a collapse of the insurance arrangement. This is a prospect the company will not entertain. The company also refuses to negotiate over the work schedule. The schedule is rigid, and any changes to it would adversely disrupt the working of the organization. This is not allowable at any cost.
An arbitrator’s primary responsibility is to study the facts of the case. This must be done while remaining impartial. The arbitrator must not appear to have any bias towards any side. Having studied the case as presented by both parties, it is evident that a decision on the matters raised is possible. On the issue of a vacation policy, the arbitrator feels that there is a need for change. Hence, the decision is in the favor of the union. Leave days must be left to accrue wholly into the next year. These days have been earned by the employee hence should not be denied. On the issue of sick days, the arbitrator feels that company proposal is reasonable and fair. Sick days cannot accrue into a new year. The arbitrator also rules that the company should put in place a life insurance plan as well as a tuition reimbursement plan. These are beneficial to both the company and the employees hence should be implemented expeditiously.
The arbitrator makes the decision on vacation based on the provisions of the International Labor Organization. Specifically, the arbitrator relies on the Paid Vacation Convention (Cooper, Fisk, & Labor Law Group (U.S.), 2005). This indicates that an employee is entitled to at least 21 days paid leave excluding national days. An employee must also have a minimum of one leave day for every 17 days of work. In addition, employees have earned their rest days hence these must accrue to the next year until when the employee deems fit to enjoy them. The second decision about the sick days was made with the regard that whereas the right to an income during sick days must be safeguarded, provisions should not be made that can create an avenue for abuse. National labor law is clear on sickness and sick leave. However, sick days are not ordinary leave days and hence cannot accrue for use on the premise that an unfortunate event did not befall the employee in the previous year. As pertains to life insurance, it has become a common practice the world over, and in the country also, to have life insurance policies for employees. These policies are a form of investment and thus a form of career growth. Hence, the company must aim to support this advancement. This applies to the tuition reimbursement plan as well. In future, proposals should be made in consultation with all players, which would help to evade future conflict. Another suggestion is to check industry practice before drafting any proposals or contracts.
American Association of Health Plans. (1996). HMO & PPO industry profile. American Association of Health Plans.
Cooper, L. J., Fisk, C. L., & Labor Law Group (U.S.). (2005). Labor law stories. New York: Foundation Press.
Natacha , D., & Budin, B. (2008). Domestic workers: towards an ILO convention. International Union Rights, 19.
St. Antoine, T. J. (2010). ADR in Labor and Employment Law During the Past Quarter Century. ABA Journal of Labor & Employment Law, 411-447.
Tresnowski, B. R. (1985). PPOs: The Choice Isn't Always for the Least Expensive. Inquiry, 331-332.
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