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Labor Disputes - Module 5 of 5

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Module 5: Labor Disputes 

Labor disputes arise when there are disagreements over workplaces rights. Typically, these disagreements revolve around the terms of an employment contract, union representation, grievance processes or the collective bargaining process itself. Labor disputes can disrupt workplaces, and employees can lose out on payments and professional opportunities. Likewise, employers must manage workplace morale and productivity issues related to labor disputes that can lead to revenue losses and, in some cases, failure. To avoid major disruptions like strikes and lockouts within workforces experiencing disputes, modern labor policies afford employers and employees several avenues for dispute resolution.

Modern Labor Disputes

Labor laws define “labor dispute” as any controversy concerning the terms, tenure, or conditions of employment or protected activities surrounding union association or representation.[1] Labor disputes are most often disagreements between labor unions and workforce managers, but employers can initiate labor disputes before a union is formed. This can occur if, for example, management refuses to acknowledge employee representatives or otherwise interferes with the organization of a union or the election of union officials. However, most often, labor disputes arise over wage and benefit negotiations. This type of dispute is called a contract dispute, and it tends to arise when a collective bargaining agreement is up for negotiation or about to expire, but labor and management disagree about the terms of the new agreement.

Outside of contract disputes, modern labor disputes can arise in circumstances where an employee or union representative believes that the employer is not following a negotiated collective bargaining agreement and files a grievance. A grievance is an official objection regarding the manner in which an employer is carrying out a collective bargaining agreement. For example, if an employee covered by a collective bargaining agreement is terminated and the union objects, the union may initiate a grievance. The grievance is filed with the employer as a formal complaint outlining the issues the union has with the way the employer is interpreting the existing contract.[2] 

When a labor dispute arises, the union and the employer meet to negotiate a fix. The National Labor Relations Act encourages employers and employees to work together to find a compromised solution. However, labor disputes can escalate if the parties hit an impasse.  At the point of impasse, both parties agree that further discussions would be useless, as they are unable to find a voluntary solution. Courts have characterized this state as one “in which the parties, despite the best of faith, are simply deadlocked.”[3]

If this occurs during collective bargaining negotiations, employers have the right to make unilateral changes to the collective bargaining agreement, subject to certain limitations. Specifically, the employer is permitted to implement terms taken from the union’s most recent proposal without the union’s approval as long as the terms do not undermine the union’s bargaining position.

For example, if an employer refuses to accept a certain wage offered by a union in a collective bargaining agreement and then offers the workers a higher wage than the union had demanded, that is an unfair labor practice. It is prohibited because it impedes collective bargaining. If the employer had offered the higher wage to the union as part of the collective bargaining negotiations rather than to the workers directly, the impasse would have been avoided.[4]

When an impasse occurs, neither party is happy. In these cases, an employer may institute a lock out or a union may call a work stoppage or strike.

Work Stoppages

Labor strikes and workplace stoppages are among the most recognizable and publicized types of labor disputes – and they are becoming more common. In 2018, almost 500,000 employees were involved in labor disputes that stopped work, the highest figure since 1986. Twenty of these work stoppages were major disruptions caused by massive organized labor strikes. These labor strikes disrupted workplaces across the country, but they have also helped boost wages for thousands of workers. Three of the largest labor disputes in 2018 were teacher strikes in Arizona, Oklahoma and West Virginia. In Arizona, the statehouse authorized a 20 percent raise. Striking teachers in Oklahoma went back to work only after lawmakers authorized an extra $479 million in school funding, and West Virginia’s teachers received a 5 percent raise and important health insurance concessions.[5]  

A union can lawfully call a strike for any of three reasons: (1) the employer will not acknowledge labor workers’ organized activity to create a union, (2) there is an unaddressed demand for economic improvements in the workplace, or (3) the employer is committing unfair labor practices. Labor strikes are often responses to impasses in collective bargaining agreements, but a union can call a strike at any time with a two-thirds vote of its membership. Once the union members agree to strike, the union’s constitution or bylaws dictates the procedures.[6]  

The National Labor Relations Act protects striking and picketing for both unionized and non-union workers, with the exception of those who hold “essential” jobs like police officers, firefighters and prison guards. However, to ensure that labor strikes are carried out civilly, the law imposes several requirements on striking and picketing. For example, it must be clear from the location of activities of picketers that they are picketing a given employer; they may not unreasonably interfere with neighboring businesses. Also, employers may amicably – but not by force, threat or with promise of benefits – urge striking employees to return to work. Employers may discourage striking workers in other ways, however, such as by discontinuing wages or denying unemployment compensation benefits. [7]

There are also significant economic risks for employees who go on strike. Workers on strike do not receive salaries, although in some cases strikers may receive financial assistance from their unions’ strike funds.[8] Striking workers receive no assurances that a dispute will be resolved or that an employer will meet the demands they are trying to achieve. Conversely, if a union member works during a strike, he can be fined by the union unless he resigns from the union membership before going back to work. However, employees who resign during a strike are generally permitted to rejoin the union after the strike is over.[9]

Legal standards also prevent labor strikes from dragging on beyond the proper time for resolution. For example, in Florsheim Shoe Store Co. v. Retail Shoe Salesmen’s Union, employees seeking to unionize were being courted by two unions competing for their membership. Eventually, the employees and management were able to resolve the dispute. However, a rival union maintained a picket line at the Florsheim store in an attempt to compel employees to join its ranks even though the employees had already organized under a different union. Courts reviewing the case found that once the employees at Florsheim organized under a certified union, the dispute between labor and management had ended, and that the rival union had violated labor laws by continuing to picket.[10]

Once a labor dispute is over, the NLRA protects striking employees from retaliation. For example, employees cannot be terminated for executing their legal right to stop work. Employees may, however, be terminated for inappropriate or unlawful activity they engaged in while on strike, or they may lose their jobs to replacement workers.

Lockouts and Retaliation

Whether an employer is permitted to terminate and permanently replace a worker out on strike depends upon whether the labor dispute is over economic issues or workplace fairness and safety issues.  

If the purpose of a strike is to pressure an employer into making economic concessions like higher wages, better hours or improved working conditions, then the striking workers are economic strikers. In this type of strike, an employer is permitted to hire permanent replacements for picketing workers and retain them after the strike has ended. However, the aggrieved worker remains eligible for reinstatement if and when the job becomes available again.  

Employees striking in protest of an unfair labor practice recognized by the National Labor Relations Act, on the other hand, qualify as unfair labor practice strikers. The law prohibits employers from permanently replacing unfair labor practice strikers and they are entitled to unconditional reinstatement. They can be replaced by temporarily-hired workers only. After the strike ends, any workers hired temporarily during the strike will therefore usually be terminated. Sympathy strikers – unaffected workers striking in solidarity with other affected workers – are also protected from permanent replacement. However, if a striking employee taunts or threatens workers who cross the picket line, the striking employee can lose the right to reinstated employment.[11]

The lockout is employers’ answer to a labor strike. In a lockout an employer prevents employees from working. Lockouts are relatively rare, but they are powerful tools for employers. When lockouts have occurred, they have most commonly been in the field of professional sports. In 2011, the National Football League made history with a 136-day lockout, the longest work stoppage in the league’s history. The NBA, NHL and Major League Baseball have also experienced labor disputes that have resulted in lockouts.[12]  

When lockouts occur, employers cannot selectively permit some employees to enter and others not; rather, the entire workforce is prohibited from working. However, the employer is permitted to continue business operations with non-union employees and temporary hires or subcontractors.[13] To avoid lockouts, modern collective bargaining agreements often contain provisions that prohibit employers from locking out employees and instead prescribe specific standards for dispute resolution.[14]

Labor Dispute Arbitration

When legal disputes cannot be resolved between parties, they often end up in court. A lawsuit is one key legal mechanism employees have used to prevent unfair labor practices and resolve labor disputes. For workplace issues that spread across an entire organization or industry, employees may use a class action lawsuit.[15] However, most often, labor disputes are resolved outside of the courtroom through alternative dispute mechanisms like arbitration and administrative adjudication.

Employers often require employees to sign binding arbitration agreements that guide workplace disputes. Arbitration can be agreed upon by all parties to a collective bargaining contract or other type of workplace agreement. The arbitration process generally involves a private decision-maker or tribunal. It functions much like a court procedure, with the arbiters serving as the fact finders and an arbitration agreement governing the process. Arbitration provides administrators with quasi-judicial tools for resolving the dispute, and they serve as watchdogs ensuring that proper rules and procedures are followed.[16]  

Courts are generally required to enforce arbitration agreements unless they violate a law. In the past, the Supreme Court has interpreted the NLRA to prevent employers from including terms prohibiting employees from filling class actions or collective claim lawsuits.[17] However, the Supreme Court has more recently stated that court intervention is only appropriate in very limited circumstances, such as fraud, duress or unconscionability. In Epic Systems v. Lewis, the Court also held that bilaterally-negotiated arbitration agreements between employers and employees must be enforced regardless of prior administrative decisions on the matter.[18]

That case also rules that employers may demand individualized mandatory arbitration agreements when contracting employment despite other collective bargaining rights that may be in place. In this type of arbitration, fairness is often an issue because employers can structure agreements as they see fit and demand agreement as a condition of starting work. For example, at the start of the Epic Systems case, the NLRB had quashed an employer policy barring class-action suits on the grounds that arbitration agreements interfere with employees’ rights to engage in concerted action for mutual aid and protection.[19] Both the Court of Appeals and the Supreme Court disagreed with the Board, deciding instead that individual arbitration agreements between employers and employees must be enforced.[20]  

Often, employers dictate the arbitration agreements and employees are required to accept them as conditions for employment. To address the unequal balance of power in these circumstances, most states have passed laws aimed at making labor dispute arbitration more equitable. Of these, most have adopted the Uniform Arbitration Act, a uniform law that helps protect parties involved in a labor dispute by setting rules and standards for the process that are consistent across jurisdictions. This law has also helped modernize arbitration processes by adopting the latest developments in arbitration law.[21]

Administrative Adjudication

When arbitration is not possible or unsuccessful, a labor dispute may move to administrative adjudication. In an administrative adjudication, the parties allow the National Labor Relations Board or other governing agency with jurisdiction to provide a final remedy to resolve a labor dispute.  

Administrative adjudications are governed by the Administrative Procedure Act, which creates uniform standards and processes that agencies must follow when engaging the public in this capacity.[22] Because the National Labor Relations Board has the power to hear and determine disputes that involve unfair labor practices, the agency must follow the general requirements of the Administrative Procedure Act as well as its own internal policies and procedures. For example, an administrative case filed with the Board begins with a regional director. If a complaint is not settled by the regional director, it moves to a hearing before an NLRB administrative law judge. These judges sit locally, but are overseen by the Board. Parties to an adjudication can prepare evidence, witnesses, experts and arguments.[23] The judge makes a final decision based on the facts and law presented by the parties to the case. If one or both litigants are unhappy with the result, they can appeal.

The NLRB’s Office of Appeals deals with appeals. Once appealed, an attorney at the office reviews all the documents in the case and any new information submitted by the charging party. The Board’s general counsel can reverse a regional director’s decision, but if the reversal is denied there is no further recourse for litigants within the administrative agency.[24] Rather, after the National Labor Relations Board makes a final decision on a matter of law, a party may appeal the agency’s decision to the court of appeals of proper jurisdiction. From there, the Court of Appeals can enforce, set aside, or remand all or part of the case for reconsideration.[25]  

At the end of the day, the most effective dispute resolution is one that maximizes the best possible value for all parties. To help parties find these solutions, the NLRB runs an alternative dispute resolution program to assist parties to settle cases pending on the administrative docket. Rather than having an administrative judge make the final decision, the Board provides a mediator who facilitates the discussion to find solutions that serve both the parties’ interests. In these cases, the parties participate in voluntarily confidential discussions and may withdraw their participation at any time. If they agree to a settlement, the terms of the negotiated resolution are reviewed and approved by the Board and implemented between the parties.[26]


Thank you for participating in LawShelf’s video-course on labor relations. We hope that you now have a better understanding of labor law in the United States and how federal law regulates the balance of power between employers and employees. We encourage you to take advantage of our other offerings in the areas of employment law and business law and please let us know if you have any questions or feedback.



[23] National Labor Relations Board, Decide Cases, https://www.nlrb.gov/about-nlrb/what-we-do/decide-cases

[24] National Labor Relations Board, Investigate Charges, https://www.nlrb.gov/about-nlrb/what-we-do/investigate-charges 

[25] National Labor Relations Board, The NLRB Process, https://www.nlrb.gov/resources/nlrb-process 

[26] National Labor Relations Board, Decide Cases, https://www.nlrb.gov/about-nlrb/what-we-do/decide-cases