Illinois HB 580: The Political Battle Over Interest Arbitration

Published March 23rd, 2016 -  - 03.23.167


When it comes to labor news in Illinois, most attention is on the Chicago Teachers Union and its likely strike in April.  But HB 580, a labor bill pending in Illinois, merits attention as well, as it has ignited fierce debate in the state for over a year.  Though the future of the bill is uncertain, it raises important questions about public sector unions that have little choice but to engage with partisan politics.

Current Law & Stalemate

HB 580 would create an additional method for concluding agreements between public sector unions in Illinois and the state government, creating the option of using binding arbitration instead of providing for exclusive use of the Illinois Labor Relations Board.

Currently, under the Illinois Public Labor Relations Act, public sector unions negotiate directly with the governor.  If negotiations break down, either side may ask the Board to find that an impasse has been reached, triggering the union’s right to strike as well as the state’s right to lock out workers and shut down the government.

The state’s contract with the American Federation of State, County, and Municipal Employees (AFSCME) Council 31, the union that represents the majority of Illinois public employees, expired on June 30, 2015.  Despite multiple bargaining sessions, AFSCME and Governor Bruce Rauner have yet to reach an agreement over a new contract.  The central points of disagreement are the state’s demands to freeze wages for four years, raise the threshold for overtime from 37.5 to 40 hours a week, and increase employee contributions to health care plans.  AFSCME wants higher wages and to keep the state’s proposed changes out of the new agreement.

In January, Governor Rauner took the step authorized under current law and referred the matter to the Board, asking it to make the impasse finding that would allow him to forego further negotiations with AFSCME and impose his contract terms unilaterally, leaving workers only with the option to strike (for AFSCME Council 31, such a strike would be its first).  In response, AFSCME and its supporters argued that the parties have not reached an impasse, accusing Governor Rauner of abusing the Board process to escape his obligation to bargain with unions.

HB 580

But, in addition to responding directly to Governor Rauner, the union also turned to its supporters in the state legislature.  Democratic-backed HB 580 would allow labor disputes between public sector unions like AFSCME and the state to go to binding interest arbitration instead of to the Illinois Labor Relations Board.  The result of such arbitration would be a contract binding on both parties, rather than – as is the case under current law – an impasse determination.

HB 580 incorporates the procedural mechanisms of the Illinois Uniform Arbitration Act, which leaves the appointment of arbitrators to “any method of appointment of arbitrators agreed upon by the parties.”  While this makes the selection of decision-makers an open question, the use of any decision-maker other than the Board appears to be a central goal for labor because Governor Rauner, a staunchly anti-labor Republican, has appointed four of the Board’s five members.

(In case labor’s support for arbitration strikes some readers as surprising – given the high profile fight against arbitration in cases like D.R. Horton – it is important to note that the kind of interest arbitration at issue in HB 580 is different than the kind of mandatory arbitration at issue in Horton and related cases.  Interest arbitration is a means to resolve disputes during contract negotiations, not a mechanism by which employees waive their right to court adjudication of statutory labor and employment rights.  As AFSCME frames it, interest arbitration is “a long-established, fair process under which an independent arbitrator mutually chosen by the parties conducts hearings, examines the issues where differences remain between the parties—taking into account factors such as the state’s fiscal condition—and issues a recommended settlement that the parties may accept.”)

Under HB 580, if the parties agree to binding arbitration, both waive their most powerful economic weapons: strikes and lockouts.  Still, some scholars have argued that interest arbitration is a viable alternative to strikes that can protect workers’ interests.  In fact, interest arbitration was a key component of the proposed Employee Free Choice Act, a federal attempt by Democrats to reinvigorate protections for organized labor.

Bill sponsor Representative Emanuel “Chris” Welch, a Democrat has said this waiver of the right to strike represents a “major concession” by unions, but Governor Rauner sees the bill as nothing but a politically motivated workaround for labor, calling it “a blatant attempt by career politicians to force a tax hike and help AFSCME secure a special deal by changing the rules of the game in the fourth quarter.”  Emphasizing the state’s budget crisis, Governor Rauner estimates the bill would cost taxpayers $3 billion, though AFSCME described this figure as “highly exaggerated” because it includes costs already in place under the previous contract.

The Illinois House voted to pass HB 580 in February and the Senate did so last week, sending the bill to Governor Rauner for his signature.

Prospects for HB 580

The immediate future of HB 580 is nearly certain: Governor Rauner will veto the bill.  The near-certainty of this prediction derives not only from the Governor’s statements about HB 580, but from his veto of a nearly identical bill, SB 1229, last year.  After Governor Rauner’s veto of SB 1229, the Illinois Senate had enough votes to override the veto, but the House failed to obtain the required 71 votes,, with a vote of only 68-34.

It is unclear whether the legislature can successfully override such a veto this time around, especially in the House where the vote was 67-46-2.  Most notably, Representative Ken Dunkin, a controversial Democrat who has been criticized for breaking rank, voted against HB 580 despite being publicly scolded by President Obama for missing the override vote on SB 1229.

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