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Binding arbitration in Michigan is governed by Public Act 312 of 1969. (MCL 423.231 through 423.247) The act covers all public safety workers, such as police officers and firefighters, employed by county and municipal governments in the state. A 1978 amendment to the state constitution extended binding arbitration to include state police troopers and sergeants. The legislature also passed a separate law, similar to P.A. 312, to cover state police. If Proposal 02-3 passes, the the same procedures described here will apply to all unionized state employees.
Under Michigan's binding arbitration law, either the employer or a union may call for binding arbitration if collective bargaining reaches an impasse. (Under the proposal, only the union will be allowed to call for arbitration.) At that point both the employer and the union appoint one member of a three-member arbitration tribunal. The critical third member is chosen from a pool of arbitrators maintained by the Michigan Employment Relations Commission (MERC), which selects three candidates at random from its arbitrator pool. The union and the employer each strike one name, and the remaining arbitrator serves as chairman of the tribunal.
Each party then submits the issues they want the tribunal to settle, along with their final offers. The tribunal holds hearings and considers evidence. The deadlines listed in the statute call for the arbitration process to be completed in under three months, but these deadlines are almost always waived, and arbitration proceedings that continue for over three years are not unheard of. On occasion the parties will come to an agreement in the course of arbitration, otherwise the panel issues an "award" which is binding on the parties and serves as their contract.
State law lists the factors that the tribunal should consider:
(a) The lawful authority of the employer.
(b) Stipulations of the parties.
(c) The interests and welfare of the public and the financial ability of the unit of government to meet those costs.
(d) Comparison of the wages, hours and conditions of employment of the employees involved in the arbitration proceeding with the wages, hours and conditions of employment of other employees performing similar services and with other employees in both the public and private sectors.
(e) The cost of living in given area.
(f) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other excused time, insurance and pensions, medical and hospitalization benefits, the continuity and stability of employment, and all other benefits received.
(g) Changes in any of the foregoing circumstances during the pendency of the arbitration proceedings.
(h) Other factors normally or traditionally taken into consideration in the determination of wages, hours and conditions of employment through voluntary collective bargaining, mediation, fact-finding, arbitration or otherwise between the parties, in the public service or in private employment.
On economic issues, including the critical questions of wages and benefits, state law requires the panel to select either the union's or the employer's position -- it cannot fashion its own compromise. (Frequently the parties will agree to separate wages from benefits, or allow each year's salary to be treated as a separate issue, allowing some room for the panel to craft a rough compromise.)
While it is possible to challenge an arbitration award in court, actually overturning an award is extremely difficult. According to P.A. 312 an award can only be overturned if the panel "exceeded its jurisdiction; the order is unsupported by competent, material and substantial evidence on the whole record; or the order was procured by fraud, collusion or other similar and unlawful means." In practice, arbitration awards can only be overturned in cases involving fraud or abuse of authority. It is virtually unheard of for a court to overrule an arbitration panel on the grounds was unjustified by the evidence.
