First Contract Arbitration: Effects on Bargaining and Work Stoppages

Newly certified unions often experience difficulty negotiating a first agreement. To remedy this, the Employee Free Choice Act proposes that the National Labor Relations Act provide for first contract arbitration (FCA). Using a panel of Canadian jurisdictions that have introduced FCA legislation at different times over several decades, the author addresses three questions: (1) How does this legislation affect the incidence of first agreement work stoppages? (2) Does FCA encourage or discourage collective bargaining in the negotiation of first agreements? (3) Does FCA influence the duration of first agreement work stoppages? The author finds that the presence of FCA legislation reduces first agreement work stoppage incidence by at least 50 percent, yet unions make use of FCA infrequently and first contracts are rarely imposed by third parties. Together these results suggest that FCA encourages collective bargaining by creating an incentive for the parties to bargain in good faith and negotiate an agreement. Finally, FCA legislation has no statistically significant impact on the duration of first agreement work stoppages.