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U N IT E D ST A T E S D E P A R T M E N T OF L A B O R
Frances Perkins, Secretary
BUREAU OF LABOR STATISTICS
Isador Lubin, Commissioner (on leave)
A . F. Hinrichs, Acting Commissioner

Arbitration Provisions in U nion

Prepared in the

D IV ISIO N OF IN D U S T R IA L R E L A T IO N S
FLORENCE PETERSON, Chief

B ulletin 7s[o. 780

UNITED 8TATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1944

For sale by the Superintendent o f Documents, U. S. Governm ent Printing Office
Washington 25, D . C. - Price 5 cents




Letter of Transmittal
U nited S tates D epartment of Labor,
B ureau of L abor S tatistics,

Washington, D. C,, April 19, 19 44.

The Secretary of Labor:

I have the honor to transmit herewith a report on arbitration clauses in
union agreements in selected industries. The report is based on a study of
1,254 agreements in 14 major industries. The project was initially undertaken
at the request of the National War Labor Board, which expressed a need for
detailed information on existing arbitration arrangements in major plants
throughout the country. In order to serve a wider purpose, this report includes
arbitration provisions for the smaller, as well as the larger, plants in the \ 4
industries.
This report was prepared by Abraham Weiss under the general direction
of Florence Peterson, Chief of the Industrial Relations Division.
A. F. H inrichs , Acting Commissioner,
Hon. F rances P arkins ,
Secretary of Lalor,

Contents
Page

Prevalence of arbitration provisions__________________________________
Permanent versus ad hoc arbitration------------------------- ----- ------Permanent arbitration__________________________________________
Ad hoc arbitration______________________________________________
Initiation of arbitration proceedings__________________________________
Automatic arbitration___________________________________________
Permissive arbitration__________________________________________
Composition of arbitration agency---------------------------------------Selection of arbitrators______________________________________________
Time limits______ __________ ______________________ ______ __________
Status of arbitration decisions___________________________ ____________
Scope of arbitration----------------------------------------------------—
Appendix A.— Agreements analyzed for arbitration clauses, by industry and
size of plant______________________________________________ _____
Appendix B.— Sample arbitration provisions............................................. -




1
3

3
4
5
5
6

6
8
10

11
11
14
15

Bulletin T^io. 780 o f the
U nited States Bureau o f Labor Statistics

Arbitration Provisions in Union Agreements
At the time an agreement is adopted, the employer and the union,
through collective bargaining, mutually determine the working con­
ditions to be maintained for a specified period. Specific disputes
may, however, arise during the term of the agreement which the
parties are unable to settle themselves. To resolve these disputes, the
parties, as a last resort, may accept arbitration by an outside party.
The inclusion of an arbitration clause in an agreement establishes
a fixed policy and procedure for the duration of the agreement, al­
though, of course, the absence of such a clause does not preclude an
employer and union from mutually deciding to have a specific dispute
arbitrated at any time.
Prevalence of Arbitration Provisions

Three out of four union agreements in 14 important industries,
covering about 83 percent of the workers under the agreements ana­
lyzed, provide for arbitration as the terminal point in the grievance
machinery.1
In some industries almost all the agreements provide for the arbi­
tration of disputes arising during the terms of the agreements; in
other industries this means of settling grievances is less common. In
the petroleum production and refining, steel (blast furnaces and roll­
ing mills), and textile industries, over 90 percent of the agreements
provide arbitration, whereas such provisions are contained in only
about 40 percent of the agreements covering automobile and parte
plants and in about 60 percent of the agreements covering plants
manufacturing machinery (other than electrical). Between 60 and
70 percent of the agreements in the aluminum, rubber, and steel
products industries and between 75 and 85 percent of the agreements
in aircraft, industrial chemicals, electrical machinery, and meat-pack­
ing industries have arbitration provisions.
On the whole, agreements with large companies tend to have arbitra­
tion provisions more frequently than agreements covering smaller
plants.2 This tendency is particularly marked in the aluminum,
electrical-machinery, steel, and steel products industries. In the in­
1 This study of arbitration provisions is based on an analysis of 1,254 agreements, all
of which were in effect in January 1944. See appendix A for the industry distribution
of these agreements and the number of workers covered!
2 In this study, the agreements are classified into two g roups; namely, those for m ajor
or large companies and those for small companies. Since the relative sizes of companies
in the several industries vary widely, the line of demarcation differs for each industry. In
the automobile industry, for example, agreements for companies employing 2,000 or more
workers are classified as major, while in the cotton-textile industry, agreements for com­
panies employing 250 or more workers are so classified.




(i)

2

dustrial chemicals and the woolen and worsted textile industries the
proportion of smaller plants with arbitration provisions is larger
than the proportion of major plants. (See table 1.)
T able 1.— Arbitration Provisions in 1,254 Union Agreements in Selected Industries
All companies
Industry
Total

Major companies

Small companies

With With­
With With­
With With­
out
out
out
arbi­ arbi­ Total arbi­ arbi­ Total arbi­ arbi­
tration tration
tration tration
tration trations
Percent of agreements

All industries.....................................

100

73

27

100

79

21

100

71

29*

Aircraft, excluding parts....................
Aluminum........................................
Automobiles and parts......................
Chemicals, industrial.........................
Machinery, electrical........................
Machinery, other..... .........................
Meat packing__________ ________
Petroleum production and refining...
Rubber........................................ ......
Steel—Blast furnaces and rolling
mills........... ...................................
Steel products...................................
Textiles:
Cotton....................................... .
Silk and rayon........... .................
Woolen and worsted....................

100
100
100
100
100
100
100
100
100

77
66
42
86
77
69
81
95
69

23
34
58
14
23
41
19
5
31

100
100
100
100
100
100
100
100
100

77
68
46
81
88
65
85
97
73

23
32
54
19
12
35
15
3
27

100
100
100
100
100
100
100
100
100

77
50
41
89
74
57
79
93
67

23;
50
59 s
11
26'
43:
21
7'
33?

100
100

92
65

8
35

100
100

100
76

24

100
100

89
63

ir
37

100
100
100

98
94
93

2
6
7

100
100
100

100
100
90

10

100
loa
ICO

98
93
94

2
7
6;

Percent of workers
AH industries....................................

100

83

17

100

85

15

100

76 1

241

Aircraft, excluding parts....................
Aluminum.........................................
Automobiles and parts......................
Chemicals, industrial.........................
Machinery, electrical i .......................
JMachinery, other..............................
Meat packing............. .....................
Petroleum production and refining.._
Rubber___________________ ____
Steel—Blast furnaces and rolling
mills........ .......................................
Steel products....................................
Textiles:
Cotton___ _______________
Silk and rayon..____ ________
Woolen and worsted....................

100
100
100
100
100
100
100
100
100

79
80
83
75
87
61
89
94
53

21
20
17
25
13
39
11
6
47

100
100
100
100
100
100
100
100
100

75
81
87
67
96
66
89
95
50

25
19
13
33
4
34
11
5
50

100
100
100
100
100
100
100
100
100

89
24
36
90
73
51
83
84
70

11
7664
10
27
49
17
16
30

100
100

99
79

1
21

100
100

100
83

17

100
100

95
77

5
23;

100
100
100

99
99
98

1
1
2

100
100
100

100
100
99

1

100
100
100

97
98
97

3’
2
3'

As is to be expected, from the fact that arbitration is more common,
in large than small companies, the proportion of workers under agree­
ment covered by arbitration provisions is larger in most industries tham
the proportion of agreements with such clauses. For example,,
although less than half of the agreements with major automobile
companies provide arbitration, 87 percent of the workers employed!
by these companies have recourse to arbitration, owing largely to
the presence of arbitration in the multiplant agreements of the Chrys­
ler, Ford, and General Motors companies. In industrial chemicals
the reverse is true, reflecting the fact that the small plants have adopted
arbitration provisions more frequently than the larger companies, h t




3

the rubber industry, although a larger proportion of major plants
than small plants provide for arbitration, the proportion of workers
covered by arbitration provisions is smaller, because a few of the
agreements with larger companies (such as Goodrich and Goodyear
Akron plants) do not provide for arbitration.
In the following sections the differences among the 915 union agree­
ments that have arbitration provisions are discussed as regards the
permanency of the arbitration machinery, the requirements for initiat­
ing arbitration proceedings, the composition and method of selecting
the arbitration agency, time limits for establishing arbitration ma­
chinery, and the finality and scope of the decisions.
Permanent Versus A d Hoc Arbitration

Most arbitration agreements provide that the person or persons who
are to serve as arbitrators are to be selected whenever a particular
need arises. On the other hand, 5 percent of the agreements provide
for permanent arbitration machinery. Of the 915 agreements with
arbitration clauses, 43 stipulate permanent arbitration machinery and
872 ad hoc arbitration. The limited number of agreements providing
permanent arbitration machinery, however, cover 28 percent of the
workers employed under arbitration agreements. (See table 2.)
PERMANENT ARBITRATION

Permanent arbitration provisions occur most frequently in the agree­
ments of the aircraft, automobile, meat-packing, and rubber indus­
tries, although they are found in some agreements in each of the other
industries considered, except petroleum.3 In the automobile and meat­
packing industries, 88 and 73 percent, respectively, of the workers
under arbitration clauses are covered by permanent arbitration. Al­
though agreements with the larger plants in the above-named indus­
tries tend to have permanent arbitration clauses more commonly than
agreements with smaller plants, the proportion of workers covered
by such clauses in the aircraft and rubber industries is far less than in
the automobile and meat-packing industries. In the electricalmachinery, basic-steel, and cotton-textile industries, none of the agree­
ments with major plants provide permanent arbitration.
The General Motors, Ford, and Chrysler agreements establish per­
manent arbitration and account for the high proportion of workers in
the automobile industry and for most of the workers in the aircraft
industry under permanent arbitration machinery. Similarly, the
high proportion of meat-packing workers with permanent arbitration
is explained by the master agreements of the Armour, Swift, and
Wilson companies, which contain such provisions.
The Ford and General Motors agreements contain specific references
to the termination of the permanent arbitrator’s services. In the
former agreement the arbitrator may be dismissed at any time on 30
days’ notice by either party to the arbitrator and to the other party.
•* JTor examples of permanent arbitration clauses, see Examples A and B in appendix B.




4
T able 2.— Ad H oc and Permanent Arbitration Provisions in 915 Union Agreements
in Selected Industries
All companies
Industry

Major companies

Ad Per­
Ad
Total hoc ma­ Total hoc
nent

Small companies

Per­
Ad
ma­ Total hoc
nent

Per­
ma­
nent

Percent of agreements
All industries....................-............... —..........

100 |

95

5

100

90

10

100

98

2

Aircraft, excluding parts_____ ______ _____
Aluminum ___________„___ ________
Automobiles and parts
Chemicals, industrial
_
Machinery, electrical
Machineryj other.. . .........................................
Meat packing...... ......... ............ .....................
Patrolenm production and refining
......
Rubber.------ -------------------------- ------------

100
100
100
100
100
100
100
100
100
100
100

89
95
91
96
96
98
87
100
90
96
96

11
5
9
4
4
2
13

100
100
100
100
100
100
100
100
100
100
100

85
94
64
88
100
96
73
100
79
100
92

15
6
36
12

95
100
100
100
95
99
97
100
97
94
97

5

8

100
100
100
100
100
100
100
100
100
100
100

100
100
100

98
97
96

2
3

100
100
100

100
83
89

17
11

100
100
100

98
100
98

2

Steel—Blast furnaces and rolling mills

_.

Steel products..................................................
Textiles:
Cotton
Silk and rayon

. .. . _ .................. _.
. . . . T. . . . . .
r

Woolen and worsted..................................

10
4
4
4

4
27
21

5
1
3

3

6

3

2

Percent of workers
All industries.......................... ........................

100

Aircraft, excluding parts..................................
Aluminum __________________________
Automobiles and parts
... . ...
Chemicals, industrial___________________
Machinery electrical _ ________ ______
Machinery, other..... .......................................
Meat packing_________________________
Petroleum production and refining _____
Rubber............................... ............................

100
100
100
100
100
100
100
100
100
loo
100

Steel—Blast furnaces and rolling mills

Steel products....... ..........................................
Textiles:
Cotton
. _ _, , . .......
Silk and rayon

. ..

_ .

Woolen and worsted..................................

100
100
100

28

100

65

35

100

97

3

78 • 22
1
99
12
88
91
9
5
95
98
2
27
73
100
12
88
1
99
98
2

100
100
100
100
100
100
100
100
100
100
100

67
99
9
88
100
97
23
100
85
100
98

33
1
91
12

99
100
100
100
84
99
97
100
98
99
98

1

2

100
100
100
100
100
100
100
100
100
100
100

100

100
92
98

8
2

100
100
100

94
100
98

72

97
95
98

3
5

2

ICO

100

3

77

15

16
1
3

2

1

2

6
2

In effect, however, the arbitrator’s services may be terminated without
notice since the party requesting his dismissal has the privilege of
specifying that the arbitrator shall not render decisions in cases pend­
ing at the date of notice. Likewise, while the General Motors umpire
is employed on an annual basis, he actually serves only so long as “he
continues to be acceptable to both parties.”
AD HOC ARBITRATION

Among the major agreements which provide ad hoc arbitration 4
are those with the following companies: Boeing Aircraft Co., Con­
solidated-Vultee Aircraft Corporation (San Diego, Calif.), CurtissWright Corporation (Buffalo, N. Y.), Aluminum Co. of America (all
agreements),5 General Electric Co., Westinghouse Electric & Manu­
4 For examples of. ad hoc arbitration clauses, see Examples C, D, E, F, G, H, and I in
appendix B.
5 A directive order of the National W ar Labor Board on November 28, 1942, rendered
a fte r the effective date of the current agreement covering the Cleveland, Ohio, plants of
this company, provides a permanent arb itrato r to be appointed by the parties r‘to m ake
final determ ination of all grievances which are not settled in accordance w ith the existing
grievance procedure.”




5

facturing Co., Caterpillar Tractor Co., International Harvester Co.
(all agreements), United States Steel Corporation and its subsidiaries,
Wheeling Steel Corporation, Richfield Oil Corporation, Shell Oil Co.,
Sinclair Refining Co., and American Woolen Co.
Initiation of Arbitration Proceedings

An arbitration clause may provide for arbitration at the request of
either party, at the request of the union, at the request of the aggrieved
employee or his representative, or by mutual consent of both parties.
(See table 3.)
AUTOMATIC ARBITRATION

Arbitration at the request of either party—sometimes referred to
as compulsory or automatic arbitration6—is specified in 93 percent
of the arbitration agreements, covering a similar proportion of
workers. Aluminum is the only industry considered in which a sub­
stantial proportion of the agreements do not provide for arbitration
at the request of either party. In the basic-steel industry and in the
silk- and rayon-textile industry, all the arbitration agreements em­
power the employer or the union to refer an unresolved dispute to
arbitration.
In most industries, provisions allowing either party to request
arbitration appear somewhat more frequently in agreements with
small than with large companies; but in the automobile, steel-products,
and cotton-textile industries a larger proportion of the major agree­
ments have such clauses.
T able 3.— Provisions for Initiating Arbitration in 915 Union Agreements in
Selected Industries

Method of initiating
arbitration

All arbitration
agreements

Ad hoc arbitration

Permanent arbitra­
tion

All Major Small All Major Small All Major Small
plants plants plants plants plants plants plants plants plants
Percent of agreements

At request of either party..................
At request of union...........................
At request of individual employee or
his representative..........................
By mutual consent____ _________

93
2

86
6

96
1

93
2

86
5

1
4

2
6

3

1
4

2
7

3

Total........................................

100

100

100

100

100

100

96
1

95
5

93
7

100

100

100

100

99
1

99
1

100

100

100

100

Percent of workers
91

3

89
3

96
1

By mutual consent-_____________

0)
6

0)
8

3

Total........................................

100

100

100

At request of either party.............
At request of union..................... 1...
At request of individual employee or
his representative.

._

88
3
-

84
3

0)
9

1
12

3

100

100

100

96
1

i Less than 1 percent.
6 While such arbitration is compulsory in th a t both parties m ust be willing to accept
arbitration for all unresolved disputes during the life of the agreement, it is not com­
pulsory in the sense th a t the Government has imposed arbitration. More accurately, it
is voluntarily adopted compulsory arbitration. (See Examples A, B, F, G, and H in
appendix B.)




6

A few arbitration agreements (2 percent), chiefly with the major
plants in the aircraft, rubber, and cotton-textile industries, specify
that the union may initiate arbitration; and an additional 1 percent,
almost all of which are with major petroleum plants, permit arbitra­
tion at the request of “an individual or his representative.” 7 Since
these agreements fail specifically to state that the employer also has
the right to ask for a hearing on grievances against the union, they
could be construed to prohibit appeal to arbitration by the employer.
In practice, however, the employer’s superior strategic position in the
positive steps which he can take when he has a grievance against the
union or any employees—such as the right to discipline or discharge
any employee for alleged violation of the agreement—tends to throw
the burden of protest and appeal to arbitration upon the union.
PERMISSIVE ARBITRATION

About 4 percent of the arbitration agreements, covering a slightly
higher proportion of workers^ permit arbitration only when Doth
parties mutually agree to arbitrate a dispute.8 This arrangement,
sometimes referred to as permissive arbitration, allows either party to
veto a request for arbitration, thus forcing the party desiring adjust­
ment either to accept the other’s terms or to resort to economic pressure
by way of a strike or lockout. In a few agreements, specified disputes
may be arbitrated at the request of either party, but other disputes
require mutual consent.
Requirements for mutual consent to arbitrate are found in about
one-third of the arbitration agreements in the aluminum industry—
all negotiated by the Aluminum Co. of America and covering about 90
percent of the aluminum workers under arbitration agreements9—
and in about one-tenth of the agreements in the machinery (other than
electrical) industry. The General Motors and the Westingnouse Elec­
tric & Manufacturing Co. agreements with the United Electrical, Radio
and Machine Workers (C. I. O.) and the International Harvester Co.
agreements with the United Farm Equipment and Metal Workers
(C. I. O .), covering three Chicago plants of this company, also require
mutual consent for arbitration.
None of the agreements providing for permanent arbitration ma­
chinery require the mutual consent of both parties before an issue may
be referred to such arbitration; and none of the ad hoc arbitration
agreements in the meat-packing, petroleum, basic-steel, and cotton-,
silk-, and rayon-textile industries contain such restrictions.
Composition o f Arbitration Agency

About half the union agreements analyzed designate as the arbitra­
tion agency a tripartite hoard consisting of an equal number of em­
ployer and union representatives with a neutral member acting as
chairman. In most cases the neutral member functions with the com­
* See Examples D, E, and I in appendix B.
8 See Example C in appendix B.
9 In a decision issued November 27, 1943, involving the Torrance, Calif., plant of the
Aluminum Co. of America, the N. W. L. B. disallowed a company request that the agreement
covering this plant include arbitration by mutual consent and ordered instead “compulsory
arbitration” ; i. e., at the request of either party.




7

mittee from the beginning,10 but in about one-fifth of the cases the
impartial chairman is added only in the event of a deadlock.11 In
contrast with this tripartite arrangement, some agreements call for
committees or boards composed exclusively of outside impartial per­
sons or establish a State agency to serve as arbitrators.
A considerable number of the arbitration agreements (about 36
percent) provide for single arbitrators12* and a few additional ad
hoc arbitration agreements specify that the agency may be either a
board or a single person.18 The remaining agreements studied, all
of which are of the ad hoc type, do not specify the composition of the
arbitration agency. Among these are a few which refer the choice
of arbitrator to a State or Federal agency but fail to specify whether
this agency itself is to act as arbitrator or is merely to appoint an
arbitrator. (See table 4.)
Table 4.—Composition of Ad Hoc and Permanent Arbitration Agencies Provided in
915 Union Agreements in Selected Industries
All arbitration
agencies
Composition of arbitration agency

Ad hoc arbitration
agencies

Permanent arbitra­
tion agencies

All Major Small All Major Small All Major Small
com­ com­ com­ com­ com­ com­ com­ com­ com­
panies panies panies panies panies panies panies panies panies
Percent of agreements

Single arbitrator ............. ..................
Board with impartial chairman1......
Bipartisan board, with odd man
added only if board fails to agree...
Single arbitrator or board..................

36
40

35
36

36
42

35
41

32
38

36
41

12
6
2
9

11
2

12
8

13
7

12
2

Other_______ _________________

11
3
1
9

9

9

10

9

Total.........................................

100

100

100

100

100

100

State agency *

(8)

60
16

63

11

56
25

2

4

22

22

19

100

100

100

89

91
8

34
51

1

15

100

100

Percent of workers
Single arbitrator________________
Board with impartial chairman i......
Bipartisan board, with odd man
added only if board fails to agree...
Single arbitrator or board..................
State agency

Other____

___

Total.........................................

61
24

68
17

4
6

100

51
30

6
1

6
6

6

100

5

6

(8)

40
47

(*)

5
5

100

(8)

55
22

40
48

7

5

1

7

8
8

6

100

100

100

9
1
1

100

1 Includes a few agreements which require the members of the board to have no connection with either
party.
a Includes only those agreements which specifically state that the State agency itself shall act as arbitrator.
Agreements which fail to specify whether this agency or an appointee is to serve as the arbitrator are classi­
fied under the subsequent heading.
»Less than 1 percent.

Agreements which provide for permanent arbitration tend to desig­
nate single persons or a State agency to serve as the arbitrator. About
10 See Example G in appendix B.
11 See Example F.
13 See Examples A, H, and I.
18 See Example D.

587826—44----2




8

60 percent of the permanent arbitration agreements refer to single
arbitrators; while about 22 percent, which cover plants in Massa­
chusetts, establish the Massachusetts State Board of Conciliation
and Arbitration14 as the arbitrator. Ad hoc agreements, on the other
hand, provide for the appointment of arbitration boards more fre­
quently than they designate single arbitrators.
Single arbitrators are designated by all the permanent arbitration
agreements in the aircraft and automobile industries, except the agree­
ment with the Chrysler Corporation, and by most of the permanent
arbitration agreements in the meat-packing industry. The agree­
ments of the Chrysler Corporation and the George A. Hormel Co.
each establish a tripartite arbitration committee, headed by a per­
manent chairman.
Among the ad hoc arbitration agreements, boards are established
by about 90 percent of the agreements in the meat-packing industry,
by over 70 percent in the chemical and petroleum industries, and by
over 60 percent in the aircraft, electrical-machinery, and rubber in­
dustries. In about half of the petroleum agreements, the impartial
member of the board is not appointed until after the bipartisan rep­
resentatives have failed to agree. Single arbitrators are provided in
about 80 percent of the ad hoc arbitration agreements in the steei
industry (including all the major agreements), and in over half of
those in the machinery (other than electrical) and steel products
industries.
The ad hoc agreements with the following companies specify ar­
bitration boards or committees: Curtiss-Wright Corporation (Buffalo,
N. Y., and St. Louis, Mo., plants); Texas Co. (Port Arthur, Tex.,
plant); Union Oil Co. of California (California plants); General
Tire and Rubber Co.; United States Rubber Co. (Chicopee Falls,
Mass.; Detroit, Mich., and Los Angeles, Calif, p lan ts); and Hood
Rubber Co. Single arbitrators are provided for in the agreements
of the Carnegie-Iliinois Steel Corporation and other United States
Steel Corporation subsidiaries, the Caterpillar Tractor Co., several
plants of the International Harvester Co., and the Wheeling Steel
Corporation.
The choice of either a single arbitrator or a board, which appears
in a few ad hoc agreements, is found chiefly in the rubber and cottontextile industries. Such a provision is also contained in the national
agreement of the Westinghouse Electric & Manufacturing Co.
The composition of arbitration agencies established by agreements
with large companies does not differ markedly from the composition of
those established by agreements with smaller plants.
Selection of Arbitrators

In the case of ad hoc arbitration the problem of selecting an arbitra­
tor or board must be faced each time arbitration is requested, whereas
14 This board has functioned, as a part of the Massachusetts Department of Labor, for
many years as an arbitrator when requested by employers and unions. Like the U. S.
Conciliation Service, labor-mediation activities in most States are concerned mainly with
conciliation, or with the appointment of arbitrators at the request of the disputing parties.
(See Example B in appendix B.)




9

under permanent arbitration the individual or board, once chosen,
usually serves continuously throughout the life of the agreement.
According to 70 percent of the permanent arbitration agreements,
the arbitrator was selected at the time the agreement was negotiated
and is designated by name or title in the agreement. Included in the
group are those which designate the Massachusetts State Board of
Conciliation and Arbitration as arbitrator. In about 25 percent, in­
cluding most of the permanent arbitration agreements with large
plants, the arbitrator was to be jointly selected, subsequent to the
signing of the agreement, to serve for the duration of the agreement.
Most agreements in the latter group—covering over 80 percent of the
workers under permanent arbitration—fail to provide for breaking a
deadlock in case the parties fail to agree on the selection of the arbi­
trator. A few permanent arbitration agreements state that the arbi­
trator is to be appointed initially by a designated outside agency or
individual. (See table 5.)
In 80 percent of the ad hoc arbitration agreements the selection of
the arbitrator is left to mutual agreement of the parties. While half
of these provide no automatic means for breaking a deadlock, at least
half stipulate an outside agency which is to appoint a neutral arbitra­
tor if the employer and union fail to agree upon a selection.15 Less
than 35 percent of the ad hoc agreements in the meat-packing, petro­
leum, steel, and steel-products industries empower an outside indi­
vidual or agency to select an impartial arbitrator when the two parties
fail to agree. The proportion of agreements with major plants pro­
viding such safeguards against deadlocks in the selection of a neutral
arbitrator is slightly larger than the proportion with small plants.
About 16 percent of the ad hoc arbitration agreements specify that a
designated governmental or private agency or individual shall appoint
the neutral arbitrator whenever the need for arbitration arises,16 while
a few, principally in the aluminum industry, contain no information
on how the arbitrators are to be selected.17
The agencies most frequently specified to appoint an arbitrator
under both permanent and ad hoc arbitration arrangements, either
initially or after the parties have failed to agree upon the selection, are
the U. S. Conciliation Service, the National War Labor Board, various
State labor boards or mediation agencies, and, principally in textile
agreements, the American Arbitration Association. The U. S. Concuiation Service most frequently appoints as arbitrators special mem­
bers of its own staff, although sometimes it appoints arbitrators who
are not on its staff.18 The American Arbitration Association, a private
agency, has established a tribunal which offers a panel of arbitrators
from which the two parties may make a selection, or from which the
Association, when requested, may appoint an arbitrator or arbitrators.
15 See Examples D, F, G, and H In appendix B.
18 See Example I in appendix B.
w See Examples C and E in appendix B.
18 The services of these arbitrators may be invoked in the following w a y s: By, a joint
request from the parties, directed to the Washington office of the Service; by a joint
stipulation to arbitrate, signed by the parties while a commissioner of conciliation is on
the scene; or by a request from labor and management (or either if the agreement so
provides), when an agreement exists providing for arbitration by the Service.




10
Table 5.—Method of Selection of Ad Hoc and Permanent Arbitration Agencies in
Union Agreements in Selected Industries
All arbitration
agencies
Method of selection

Ad hoc arbitration
agencies1

Permanent arbitra­
tion agencies

All Major Small All Major Small All Major Small
com- com­ com­ com­ com­ com­ com­ com­ com­
panies panies panies panies panies panies panies panies panies
Percent of agreements

Designated in agreement_________
Selection by mutual agreement; outside agency or individual to make
choice if parties fail to agree______
Selection by mutual agreement (no
reference to outside party should
parties fail to agree on choice)____
Appointed initially by outside
agency or individual

No mention_______ ____________
Total

.

3

6

2

40

42

38

41

46

39

33

41

40

15
3

12
7

17
2

16
3

100

100

100

100

70

59

88

39

4

4

6

33

42

21

33

13
8

17
2

5

4

6

100

100

100

100

100

16

14

92

Percent of workers
Pesignated in agreement........... .......
Selection by mutual agreement; out­
side agency or individual to make
choice if parties fail to agree______
Selection by mutual agreement (no
reference to outside party should
they fail to agree)_________ ____
Appointed initially by outside
agency or individual___________
_ _
No mention
T __ _
T otal..............................................

5

5

3

30

22

57

42

34

58

1

52

59

29

40

44

80

83

5
8

4
10

9
2

7
11

7
15

10
2

100

100

100

100

100

100

0)

7

86

0

0

100

100

1
100

1 Less than 1 percent.

Time Limits

In order to avoid the possibility of delay in settling disputes, and to
prevent obstruction of arbitration by either party, time limits are
specified in over half the arbitration agreements. Time limits may be
established for any one or all of the several stages in the arbitration
process—the selection of the arbitrator or arbitrators, the conduct of
hearings, and the rendering of decisions.19 The largest proportion
(over 70 percent) of the time limits are confined to the selection of the
arbitrators—an indication that unnecessary delays are not anticipated
once the arbitration proceedings are under way.20 When the arbitrator
or arbitration agency is designated in the agreement, or when the selec­
tion of the arbitrator is initially referred to an outside agency, agree­
ments do not, of course, contain time limits for selecting arbitrators.
Of the total agreements that provide for selection of arbitrators by
mutual consent, including those providing for reference to an outside
agency for selecting the arbitrator if the parties fail to agree on one,
slightly over half fix some time limits on the selection process. The
proportion of agreements providing time limits in the joint selection of
arbitrators was about the same for ad hoc agreements as for permanent,
and was greater for large than for small plants.
19 See Examples A, E; and I in appendix B.
20 See Examples D, F, G, and H in appendix B.




11
Status o f Arbitration Decisions

Since it is the purpose of arbitration finally to settle a question in
dispute, it follows that the decision or award must be accepted and
binding on the parties involved. This concept is affirmed by 90 percent
of the agreements studied, which specifically state that a decision
rendered after arbitration proceedings shall be “final and binding” on
the parties concerned; some, in addition, specifically state that there
shall be no appeal from the decision to a court or “labor board”.21
The omission of the “final and binding” clause occurs principally in
agreements which fail to describe the composition of the arbitration
agency and/or which require mutual consent of the parties to initiate
arbitration.22 Since arbitration implies final settlement of disputed
matters, an award should be considered binding even though there is
no express stipulation to that effect.
Scope of Arbitration

Definitions of the precise scope of arbitration vary from agreement
to agreement, ranging from brief but general statements23 to lengthy
itemizations of the specific issues which are or are not arbitrable.242
5
The majority of the agreements analyzed not only authorize the
arbitration of disputes involving the “interpretation and/or appli­
cation” of any of their provisions, but also enumerate specific issues
which are subject to arbitration.23 Disputes over discharges are most
frequently listed as arbitrable; a few agreements, however, do not
include disputes over discharges that result from participation in
work stoppages, incompetency, insubordination and other specified
causes, or that involve probationary employees.
Many agreements specify that the arbitrating agency has no power
to “add to or substract from or modify” any terms of the current
agreement, or that the arbitrator may not “arbitrate away, in whole
or in part, any provisions of this agreement.” Such safeguards may
be considered as restricting arbitration to interpretation and enforce­
ment of the terms of the agreement.26
When arbitration is expressly limited to interpretation, the arbitra­
tor may decide only questions over matters already covered by the
agreement and must limit his awards to interpreting its provisions in
deciding the respective rights and duties of the parties on particular
issues. Under such circumstances the arbitrators scope is, of course,
much broader if the substantive provisions of the agreement cover
many subjects than if the coverage is limited. The possible need for
utilizing arbitration to interpret an agreement is lessened, moreover,
if the provisions describing the subjects covered by the agreement are
detailed and precise.
21 See Examples A, B, D, E, F, G, H, and I In appendix B.
The National War Labor Board on September 10, 1943, issued a statem ent which in effect
stated th a t it will not review an arb itrato r’s award except where he has exceeded his
authority. Under the wage-stabilization program, however, the Board m ust review awards
involving wage issues. In March 1944 the Board instructed its regional offices and
industry commissions not to accept additional evidence or argum ent from parties when
reviewing a rb itrato r’s wage awards, except when specifically requested by the Board.
22 See Example C in appendix B.
28 See Examples B, D, E, and F in Appendix B.
24 See Example A in Appendix B.
25 See Examples H and I in Appendix B.
29 See Examples A and H in Appendix B.




12

The U. A. W.-C. I. O. agreement with General Motors is an example
of an agreement which allows the arbitrator to act on issues involving
the “interpretation and/or the application of any term of this agree­
ment” ; in addition it states that he shall have “no power to add to or
to subtract from or modify any of the terms of this agreement or any
agreements made supplementary hereto; nor to establish or change
any wage; * * *. Although some particular issues are listed on
which the arbitrator may act, such as claims of union discrimination
and alleged violation of the terms of certain sections of the agree­
ment, since all these matters are included elsewhere in the agreement,
the arbitrator’s function is limited to interpreting and enforcing the
terms specified.
Some agreements provide that any dispute over wages, hours, or
other conditions of employment may be arbitrated, without clearly
indicating whether arbitration is restricted to the interpretation of
wage and other clauses in the agreement or whether any dispute in­
volving these subjects may be arbitrated. About three-fourths of the
agreements refer to individual wage-rate disputes, such as contro­
versies over rates to be established for a “bona fide new job,” rate
changes owing to changes in job content, claims of improper classi­
fication, alleged violation of negotiated rates, individual wage rate
reviews, etc. Others refer to both general and individual wage dis­
putes during the term of the agreement, or to disputes over general
wage revisions only.
Specific references to the arbitration of wage disputes, referring
either to requests for general wage changes or to individual wagerate adjustments, are found in less than half the arbitration agree­
ments, and these generally allow such disputes to be arbitrated, al­
though the proportion of agreements which permit arbitration of gen­
eral wage disputes is considerably less than those which allow arbitra­
tion of individual wage grievances. Among the major agreements
which permit the arbitration of individual wage disputes are those
covering subsidiaries of the United States Steel Corporation; United
States Rubber Co. (Indianapolis, In d .); Shell Oil Co. (C alifornia);
and Wheeling Steel Corporation. Agreements with the following
companies specifically permit the arbitration of general wage disputes:
American Thread Co., American Woolen Co. (North Vassalboro,
Maine), and Marshall Field & Co. (North Carolina plants).
Some agreements specifically exclude from arbitration designated
management functions such as “methods of production” and the com­
pany’s “operating policy,” use of machinery, and “matters pertaining
to the financial status of the business” ; while others specifically exclude
“the purpose or the inclusiveness of this agreement,” the “enlargement
or the extension of the scope or status of the union,” and “grievance or
dispute which arises out of governmental orders, regulations or con­
tracts,” etc.
A few agreements state that “any grievance or complaint” or “any
difference” may be arbitrated and provide no clue as to whether arbi­
tration is limited to the interpretation, application, and/or enforce­
ment of their provisions, or whether grievances over matters not spe­
cifically covered by the agreement are included within the scope of




13

arbitration.27 Occasionally, an agreement appears to permit arbitra­
tion of matters not specifically covered in addition to disputes involv­
ing interpretation.28
A small proportion of the agreements studied (less than 1 percent
of those providing arbitration), in addition to authorizing the arbi­
tration of disputes over interpretation and/or disputes over certain
working conditions, specifically authorize the arbitration of disputes
over the terms and conditions of a new or renewed agreement.29 How­
ever, as the parties themselves attempt to settle disputes arising during
the term of the agreement before resorting to arbitration, so also,
through collective bargaining, do they first attempt to agree upon the
terms and working conditions when reviewing or modifying its pro­
visions. An arbitrator who is specifically authorized to arbitrate the
terms of a new agreement may not assume jurisdiction until after the
parties have tried by collective bargaining to agree on these new
terms.
27 See Examples B and D in appendix B.
28 See Example F in Appendix B.
28 See Example G in Appendix B.




Appendix A .— Agreements Analyzed for Arbitration Clauses 1
Distribution of agreements analyzed , by industry and size of com pany 2
All companies
Industry

All industries.............................................
Aircraft, excluding parts........................ —
Aluminum-.............................................
Automobiles and parts...........................
Chemicals, industrial................................
Machinery, electrical.................................
Machinery, other..................................... .
Meatpacking...... .......... ..........................
Petroleum production and refining...........
Rubber.....................................................
Steel—Blast furnaces and rolling mills_
_
Steel products.......................................
Textiles:
Cotton.................................................
Silk and rayon................... ................
Woolen and worsted............. .............

Agree­
ments

Major companies

Small companies

Agree­
Workers ments Workers

Agree­ Workers
ments

1,254

2,684,000

342

2,026,000

912

685,000

61
29

66
122
176
68
76
85
53
251

592,000
63,000
582,000
24.000
229,000
227,000
91,000
. 38,000
92.000
428.000
207,000

35
25
24
21
24
40
26
30
33
17
33

424,000
62,000
533,000
19,000
138,000
145,000
86,000
32,000
79,000
372,000
72,000

26
4
86
45
98
136
42
46
52
36
218

167,000
1,000
49,000
6,000
91,000
82,000
5,000
5,000
13,000
56,000
135,000

65
34
58

57,000
11,000
43,000

18
6
10

30,000
7,000
27,000

47
28
48

27,000
5,000
16,000

no

1 Analysis is limited to agreements on file with the Bureau of Labor Statistics which were current as of
January 1944. The proportion of all workers under agreement who are represented by the agreements
studied varies from 91 percent in basic steel to 30 percent in machinery (other than electrical); for all the
industries combined the proportion is about 65 percent.
2 Since the relative sizes of plants in the several industries vary widely, the line of demarcation between
major and small plants differs for each industry. In the automobile industry, for example, agreements
for plants employing 2,000 or more workers are classified as major while in the cotton-textile industry
^agreements for plants employing 250 or more workers are so classified.




( 14 )

Appendix B .— Sample Arbitration Provisions

Example A
In the event of failure to adjust the case at this point, it may be appealed?
to the impartial umpire, providing it is the type of case on which the umpire
is authorized to rule. * * *.
The impartial umpire shall have only the functions set forth herein and shall
serve for 1 year from date of appointment provided he continues to be acceptable
to both parties. * * *.
It shall be the function of the umpire, after due investigation and within.
30 days after submission of the case to him, to make a decision in all claims
of discrimination for union activity or membership and in all cases of alleged
violation of the terms of the following sections of this agreement, and written
local or national supplementary agreements on the same subjects: Recognition;
representation; grievance procedure; seniority; disciplinary lay-offs and dis­
charges; call-in pay; working hours; leaves of absence; union bulletin boards;
strikes, stoppages and lockouts; w ages; general provisions; upgraders; trainees;
procedures on production standards; employment of laid-off employees; and
of any alleged violations of written local or national wage agreements. The
umpire shall have no power to add to or subtract from or modify any of the
terms of this agreement or any agreements made supplementary hereto; norto establish or change any wage; nor to rule on any dispute arising regarding
production standards. Any case appealed to the umpire on which he has no
power to rule shall be referred back to the parties without decision.
The corporation delegates to the umpire full discretion in cases of violation
of shop rules, and that in cases of violation of the Strikes, Stoppages, and Lock­
outs section of the agreement the umpire should have no power to order back
pay, but if the penalty imposed by the corporation is 2 weeks’ lay-off or more,
the grievance machinery must be expedited so that the umpire’s decision will!
come within 2 weeks of the written filing of the grievance. * * *.
No decision of the umpire or of the management in one case shall create a
basis for a retroactive adjustment in any other case prior to the date of
written filing of each such specific claim. * * *.
There shall be no appeal from the umpire’s decision, which will be final and
binding on the union and its members, the employee or employees involved, and;
the corporation. The union will discourage any attempt of its members, and
will not encourage or cooperate with any of its members, in any appeal to any
court or labor board from a decision of the umpire. * * *.
Any issue involving the interpretation and/or the application of any term of
this agreement may be initiated by either party directly with the other party.
Upon failure of the parties to agree with respect to the correct interpretation
or application of the agreement to the issue, it may then be appealed directly
to the umpire. * * *.

Example B
Any difference arising between the company and the union or its members
shall be settled in the following manner. * * *.
In the event that a mutually satisfactory settlement of any grievance is not
reached within 5 days after the meeting of the grievance committee and man­
agement it shall be submitted to the Massachusetts State Board of Conciliation
and Arbitration for determination. The decision of said board shall be final
and binding on both parties, and may in the discretion of the board be retro­
active for such period as may be determined. Failure to submit to arbitra­
tion as provided in this article shall be considered a breach of this agreement.,




( 15 )

16

Example C
Should an employee (or former employee within 10 days of his lay-off, dismissal,
or discharge) feel that he has been treated unjustly, he or his union representative
or representatives may present his grievance to the proper representative of the
company, who will give it prompt and thorough consideration. This may include
any difference of opinion or dispute between representatives of the company and
any employee or union representatives, regarding interpretation or operation of
any provision of this agreement. * * *
In the event that the employee or his union representative or representatives are
dissatisfied with the explanation or disposition of the matter made by the president
or other general executive of the company, the matter shall be submitted to
arbitration if both the union and the company agree thereto.

Example D
Should any difference arise between the employer and the union or any employee,
the union agrees that there shall be no slowing up or stoppage of work on account •
of such condition. Both parties agree that in such case an earnest effort shall be
made to settle such difference immediately in the following manner: * * *
After a grievance, whether with respect to a wage matter or any other grievance,
has gone through the procedure laid down in the local agreement and has not
been settled thereunder, the local union may refer it to the international union.
If within 20 days after the international union has filed this grievance with the
management of the company the grievance has not been satisfactorily settled, the
International Union may then ask that the matter be finally settled by arbitration.
It shall thereupon be the duty of the management to meet forthwith with the
designated representatives of the union, and endeavor to agree upon an arbitrator
or arbitrators. If within 3 days no such agreement has been reached, either
party may certify the matter to the National War Labor Board, which shall
thereupon proceed to appoint an arbitrator or arbitrators whose decision shall be
final and binding. The expense of any such arbitrator shall be borne one-half by
the Union and one-half by the company.

Example E
Any individual employee or group of employees covered by this agreement may
present in writing any complaint or grievance to the proper representative of the
company. All complaints or grievances arising between the company and its
employees covered by this agreement shall be governed by and determined under
the provisions of this agreement. * * *.
If the decision of the manager or his representative is adverse and the com­
plainant still feels aggrieved, then within 10 days complainant may request that
his complaint go to arbitration; such request shall be in writing and set forth the
reasons therefor. Where arbitration is requested, the president of the company,
or someone designated by him, and the president of the union, or someone desig­
nated by him, shall meet at a time and place agreed upon for the purpose of con­
sidering said complaint and reaching a final decision thereon. If a final decision
cannot be agreed upon, they shall without undue delay agree upon a method and
procedure for the arbitration of said complaint.
If the president of the company, or the person designated by him, and the
president of the union, or the person designated by him, can agree upon a decision
on the complaint, such decision shall be final and binding. If the complaint goes
to arbitration, the award of such arbitration shall be binding upon the company
and the employees covered by this agreement. The whole course of arbitration
shall be completed within 60 days from the date the complaint is referred to
arbitration.

Example F

Alleged grievances said to arise out of the operation or interpretation of this
contract or concerning wages, hours, or conditions of employment not otherwise
disposed of as herein provided shall be settled in the following manner: * * *.
If either party desires, it can notify the other party in writing at this meeting
[between national union and company representatives] or within 24 hours follow­
ing this meeting that it wants the matter referred to arbitration, and name its
arbiter. The other party must name its arbiter within 24 hours of receipt of this




17
notification. The arbiters so selected shall meet within 7 days after the notifica­
tion of the appointment of the second arbiter, and endeavor to adjust the matter.
If unable to reach an agreement, they shall name a third arbiter who shall be
umpire and shall be, in the event the matter to be submitted involves job assign­
ment, work loads, or wages, a textile technician. If the two arbiters cannot agree
upon the third arbiter within 3 days, either party may request the Director of the
Conciliation Service of the United States Department of Labor to name promptly
such third arbiter, who shall be a textile technician if the matter involves job
assignment, work loads, or wages. The board of arbitration shall thereupon imme­
diately make, such investigation, hear such statements, and consider such matters
as may be material, and as promptly as possible reach and announce its decision.
The decision of any two members of the board of arbitration shall be binding on
the parties hereto. * * *.

Example G
Questions which arise under this contract concerning its interpretation or its
enforcement shall be subject matters for negotiation or arbitration, and this con­
tract shall not otherwise be reopened or amended except by assent of both parties.
Terms of a new contract which cannot be settled by negotiation shall be arbitrated
by a procedure mutually agreed upon.
Negotiations regarding all questions, for which provision has not otherwise been
specifically made, shall at the request of either party be conducted as [outlined
in] the grievance procedure. * * *.
After negotiation under the foregoing procedure, any grievance or question
which has not been settled shall be submitted in writing to a board of arbitration
whose decision after hearing the parties and their evidence on the question so
submitted shall be final and binding on both parties for the period of this contract,
unless a different period is mutually agreed upon in writing at the time the ques­
tion is submitted to arbitration. The arbitration shall be initiated, and the board
chosen and paid, as follow s: Upon written request for arbitration by either party
to the other, each party shall promptly appoint two members; within 5 days after
said written request the four members thus appointed shall meet for the purpose
of selecting a fifth member; if they are unable to agree upon the fifth member
within 10 days after their first meeting the fifth member shall be appointed by the
Director of the Conciliation Service of the United States Department of Labor,
from his staff. * * *.

Example H
Should differences arise between the company and the union as to the meaning
and application of the provisions of this agreement or as to any question relating
to the wages, hours of work, and other conditions of employment of any employee,
there shall be no interruption or impeding of the work, work stoppages, strikes, or
lockouts on account of such differences, but an earnest effort shall be made to settle
the matter promptly in the manner hereinafter outlined. * * *.
Whenever either party concludes that further conferences cannot contribute to
settlement of the grievance, such grievance may be appealed by either party to
an impartial umpire to be appointed by mutual agreement of the parties hereto
within 15 days following receipt by either party of a written request for such
appointment. The decision of the umpire shall be final. The expense and salary
incident to the services of the umpire shall be shared equally by the company and
the union. Awards of settlement of grievances may or may not be retroactive as
the equities of each case (discharge cases excepted) may demand, but in no event
shall any award be retroactive beyond the date on which the grievance was first
presented in written form.
An umpire to whom any grievance shall be submitted in accordance with the
provisions of this section shall have jurisdiction and authority to interpret and
apply the provisions of this agreement insofar as shall be necessary to the deter­
mination of such grievance, but he shall not have jurisdiction or authority to alter
in any way the provisions of this agreement. * * *.

Example I
Should any difference arise between the company and any employee or group
of employees covered by this agreement, as to the meaning and application of
this agreement, or should a grievance arise (not involving a change in any provi-




18
sion of this agreement, or any supplemental agreement) the procedure for settle­
ment shall be as follow s: * * *.
Should the decision of the plant manager be unacceptable to the union or to
the aggrieved employee or employees, the case may, within 11 days thereafter,
upon written notice to the company by the union or the aggrieved employee or
employees, be submitted for arbitration. Within 2 days after such notice, the
parties to the case shall jointly request either the Director of the Conciliation
Service, United States Department of Labor, or the National War Labor Board,
for the appointment of a member of the Conciliation Service or of an agent of
the War Labor Board, as the case may be, to act as sole arbitrator. The arbitra­
tor when so selected, shall proceed as soon as practicable to hold a hearing and
examine into and render a decision on the complaint at issue, which shall be
final and binding on all parties. The parties to the case shall share the expenses,
if any, incurred in connection with the arbitration. * * *.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102