The decision in this case reads like an object lesson to advocates, a reminder that in labor relations it is not only the letter of the law which counts, but also willingness to operate in accord with its spirit. At arbitration, parties are expected to parse words, torture contract language and take positions designed to buttress their positions. But it is not these actions which ultimately determine the outcome of arbitration. Rather, the parties’ ability to demonstrate good faith and fair dealing in the day-to-day labor-management relationship ultimately holds sway.
The case involved the reporting – or lack thereof – of hours worked by Individual Providers (IPs) represented by the Union. The IPs were independent contractors of the State, which was the single payer for their services. The collective bargaining agreement between the parties included the following provisions:
To promote a timely and accurate payroll system, the Employer and the Union shall work together to identify causes and solutions to problems resulting in late, lost or inaccurate paychecks and similar issues.
…
The Employer, at its expense, shall withhold from each home care worker’s paycheck the appropriate amount of Federal Income Tax, Social Security, Federal and State Unemployment Insurance, Medicare contributions, and any other taxes or public insurance fees required to be deducted by federal or state law.
The conflict arose when the Union learned some of its members had been denied unemployment insurance (UI) benefits because their hours worked had not been reported to the Employment Security Department (ESD). As it turned out, the ESD had implemented a new system which resulted in the Employer’s outsource provider not being able to transmit IPs’ hours to ESD. The Employer worked with ESD to identify the problem and implemented a “workaround” to facilitate IPs’ claims until the problem could be resolved, but did not notify the Union of the issue or engage with them in any problem-solving manner.
In its initial grievance filing, the Union alleged violation of several contract provisions, including those cited above, and demanded among its remedies that the Employer “immediately fix…the reporting issue…” and pay all resulting costs, damages and fees. During the grievance meeting the parties discussed ways to ensure the IPs were notified of the workaround. Finding there was no contract violation, the Employer denied the grievance and pointed out that it had appropriately administered the payroll as required by the contract.
At hearing, the Employer asserted – correctly – that the parties’ collective bargaining agreement was silent regarding reports to ESD. The Employer challenged the arbitrability of the matter and held that a ruling at arbitration would amount to “litigat[ing] provisions that do not exist into the Agreement.” The Employer also noted that the Union had not made its case with regard to fair dealing and good faith, nor had it shown a violation of the provisions contained in the contract addressing payroll requirements. The Employer further claimed that, since its discussion with the Union regarding the workaround, it was aware of no additional problems being encountered by IPs as a result of the reporting issue.
For its part, the Union held that the Employer was obligated by the express terms of the Agreement to work with it to resolve the matter. The Union asserted that the Employer “has not worked with the Union, other than to deny the Union’s grievance” and that it has always objected to the workaround as not being a solution reached collaboratively between the parties or acceptable to its membership. The Union presented testimony of two IPs who were harmed as a direct result of the lack of hours being reported to ESD when they sought unemployment benefits.
The arbitrator determined the matter was in fact arbitrable. Viewing “the economic effect of a delay in receiving UI benefits [as] very similar to that of a late, lost or inaccurate paycheck…” the umpire found that the Employer violated the agreement between the parties by its failure to work with the Union on identifying causes and solutions. The award ordered the Employer to work with the Union to achieve a mutually-acceptable workaround until the underlying issue could be corrected and left it to the parties to determine any payments due to IPs who may have suffered loss.
Ultimately, the parties in this case obtained an award ordering them to do what the labor-management relationship inherently requires: to work together in good faith to resolve matters as far as it lies within their power. 
It highlighted that there are some aspects to conflict resolution that can only be achieved through the efforts of the parties. The arbitrator could not fashion either a fix to the technological glitch or a mutually acceptable “workaround” but could order the parties to fulfil their respective responsibilities as parties to a collective bargaining agreement.
The underlying problem was not the fault of the Employer, nor was the Union in a position to ‘fix’ it in a practical sense. And while it could be easily established that reporting to ESD was not expressly prescribed by the contract, this was not enough to shield the Employer from its good-faith obligations; the issue had the potential to economically impact the IPs and, therefore, was of interest to the Union. For that reason alone, it was advisable for the Employer to let the Union know there was a problem. This simple action may have curtailed adversarial action and better shielded the IPs from harm due to the glitch.
Without a willingness to interact productively, employers and unions are more likely to experience not only unnecessary escalation of disputes, but also increased harm to their employees and members. In situations resulting in real economic harm to workers, parties may additionally run a risk of an otherwise sound arbitration decision being overturned if it is shown there was some dereliction of duty in the course of responding to the issue.
Parties to a labor agreement are required to share information needed to effectively meet their obligations in the relationship. An employer does well to share with the union any information it controls that could impact the wages, hours or working conditions of its represented employees. Union advocates receiving such information should not ignore it or wait for a problem to arise before responding. To properly evaluate the situation and its potential impacts, it’s best to promptly engage with the employer and take steps to obtain all relevant facts. By entering early into negotiation parties often can resolve matters more efficiently and may be able to avoid escalating conflicts through to arbitration. Moreover, they increase their ability to minimize any negative impacts to the workers. As evidence of this, we need look no further than DSHS’ statement regarding the lack of additional reports of negative impacts following its discussion with the Union about the workaround.
Advocates on both sides of the rail should keep in mind that effective practice of labor relations requires not just skill in handling the words contained in the contract, but also in taking concrete steps to maintain an effective working relationship. The duty of good faith and fair dealing is an ongoing one and is demonstrated in the parties’ conduct while responding to a dispute, not in the course of the arbitration proceeding.
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Charlene MacMillan 